New Jersey’s electric vehicle mandate is bad economics. Here’s why.

In yet another misguided attempt to make the Garden State “greener,” the New Jersey Department of Environmental Protection (DEP) recently proposed a regulatory rule that would ban the sale of new gasoline-powered vehicles by 2035. Constituents and consumers alike should be wary of this clumsy attempt by policymakers to plant New Jersey’s flag as the preeminent supporter of electric vehicles.

New Jersey’s move raises questions about the government meddling in the market while pushing policy agendas over consumer freedom and consumer choice. Despite $30 million in annual taxpayer subsidies through New Jersey’s Drive Green program the Garden State only has 31,000 zero emissions vehicles on the road as of June last year.

The fact is electric vehicles are too expensive for average families. Limiting consumer choice to only electric vehicles may price people out of cars altogether (perhaps a secondary goal of such a mandate) or force them to pay more money for something they don’t want.

According to research from Quartz, the average price of a new electric vehicle is significantly higher than a new gasoline powered vehicle. Families who are barely struggling to make ends meet due to the economic disruptions of COVID-19 will be unable to afford this additional expense. Alternatively, such a mandate may just push consumers to visit neighboring Pennsylvania or Delaware to purchase a gasoline powered vehicle, depriving the Garden State of tax revenues and needlessly sending thousands of car salesmen to the unemployment lines.

Further, creating scarcity in the marketplace and limiting consumer choice to fewer options rarely causes prices to become more affordable. New Jersey’s subsidy program could incentivize electric car companies to capture extra revenue by lowering prices slowly and hoping subsidies increase. Companies would in effect not only capture these subsidies but could influence them with pricing behavior. Equally concerning are the perverse incentives subsidy programs perpetuate. In January, the PSE&G approved a plan to spend over $166M on EV infrastructure over the next six years. The funding serves to rectify the state’s plan to build out charging infrastructure for EVs, which is troublesome considering that the move will likely translate into additional subsidies or EV mandates in the future.

Another troublesome fact is that electric vehicles are far from “zero emissions.” Electric vehicle components like seats, tires, interior, chassis, and more are created from the same petroleum products as those in gasoline vehicles. The lithium-ion batteries that power the vehicles meanwhile are often mined in countries with lax environmental standards and in ways that generate significant pollution. In fact, Wired magazine recently wrote an expose about the “Spiraling environmental cost of our lithium battery addiction.”

Another consideration is the electricity generated to power electric vehicles, which is often not emissions free either. According to the Energy Information Administration renewables and nuclear made up a little more than one-third of energy for electricity generation in 2019. The rest was derived from fossil fuels which generate emissions just the same as an automobile.

When all these factors are considered, any supposed environmental gains from electric vehicles are negligible at best. In fact, a new report from ConservAmerica unsurprisingly found that “advanced internal combustion engine vehicles (ICEVs) and hybrid electric vehicles (HEVs) can produce comparable reductions in GHG emissions as similarly equipped, full battery electric vehicles (BEVs).”

The United States has lowered their emissions in the absence of electric vehicle mandates, further begging the question as to whether such policies are necessary. In fact, a recent United Nations report found that America’s greenhouse gas emissions are in decline while those of Russia, India and China all continue to rise. Meanwhile, the Environmental Protection Agency has found modern cars to be 99% cleaner than vehicles were in the 1970s. Successes such as these are often due to technological improvements realized by the private sector, not government interference in markets.

By floating this policy prescription banning gasoline car sales in the name of “zero emissions” electric vehicles, New Jersey’s elected officials and agencies have deemed themselves market czars who will use the heavy hand of government to dictate consumer behavior. If the market will not support an expanded electric vehicle adoption without government mandates, it is certainly not the government’s role to artificially spur demand.