Sustainable Energy

How America’s Electric-Car Market Could Get Stuck in the Slow Lane

If tax breaks and other incentives continue to disappear, it will be hard work convincing consumers to swap gasoline for electrons.

In many ways, the future looks bright for battery-powered vehicles. Automakers are readying cars at a rapid rate. And because battery prices continue to fall, manufacturers are now able to start releasing more affordable vehicles—including the Tesla Model 3, Chevrolet Bolt, and Renault Zoe, which are all expected to go on sale this year.

But it’s not all good news—state and federal regulations that have been helping fuel consumer demand for electric cars are in danger of disappearing. The New York Times points out that on the state level, tax breaks on electric cars are already beginning to slide. States including Tennessee, Illinois, and Pennsylvania have all allowed their incentives to come to and end, meaning that only 16 states now offer them—down from 25. Others may soon follow: lawmakers in Colorado and Utah are currently trying to end their tax credits.

The existing tax breaks vary in generosity, from up to $9,500 in Louisiana and (currently) $5,000 in Colorado to sales and excise tax exemptions in New Jersey and Washington, D.C. Buyers also get to take advantage of a $7,500 federal tax credit on new electric cars, but that may yet be reduced or eliminated by the Trump administration.

Those seeking to stop such incentives argue that they merely benefit the wealthy, who are currently the only real market for electric cars. But if tax breaks do continue to be axed, consumers will become more reluctant to buy new electric vehicles. And if Donald Trump goes ahead with plans to roll back Obamas fuel efficiency regulations for new gas-guzzling vehicles, U.S. automakers will lack an incentive to build new electric cars.

Last year, a report by Bloomberg New Energy Finance and McKinsey suggested that two-thirds of all cars on the road in some wealthy cities could be electric by 2030. But it also warned that adoption of electric vehicles would be much slower without regulatory incentives to boost consumer interest.

Many parts of Europe are pushing ahead with strict new policies to discourage people from running regular, polluting cars—banning diesel cars from city centers, for instance, and mandating the buildout of supporting infrastructure for electric vehicles. The U.S. could find itself chewing electric-car dust if it doesn’t make the correct policy decisions in the coming years.

(Read more: New York Times, “Here’s How to Speed Up the Electric-Car Revolution,” “Four Huge Cities Are Banning Diesel Cars,” “The Paris Motor Show Confirms It: The Future Is Electric”)

The latest Insider Conversation is live! Listen to the story behind the story.

Subscribe today
Already a Premium subscriber? Log in.

Uh oh–you've read all of your free articles for this month.

Insider Premium
$179.95/yr US PRICE

More from Sustainable Energy

Can we sustainably provide food, water, and energy to a growing population during a climate crisis?

Want more award-winning journalism? Subscribe to Insider Basic.
  • Insider Basic {! insider.prices.basic !}*

    {! insider.display.menuOptionsLabel !}

    Six issues of our award winning magazine and daily delivery of The Download, our newsletter of what’s important in technology and innovation.

    See details+

    What's Included

    Bimonthly magazine delivery and unlimited 24/7 access to MIT Technology Review’s website

    The Download: our daily newsletter of what's important in technology and innovation

/
You've read all of your free articles this month. This is your last free article this month. You've read of free articles this month. or  for unlimited online access.