The US Will Spend Between $3 And $7 Per Gallon Of Gasoline "Saved" By Consumers Driving Electric Vehicles

Tyler Durden's picture

Sometimes you just have to laugh - for fear of the hysterical crying fit that would ensue from recognizing our shameful pathological reality. To wit: Reuters is reporting on a CBO study that shows the US electric car policy will cost $7.5bn by 2019. The report finds that the government's policy will have 'little to no impact' on overall gasoline consumption. 25% of the cost of the program is going up in Fisker Karma-inspired smoke as part of the $7,500 per vehicle tax credit and the rest of the cost is in grants to such well-deserved and successful operations as GM's Chevy Volt - which will backfire since the more electric vehicles the automakers sell (thanks to government subsidy) the more 'higher-margin' low-fuel-economy guzzlers it can sell and still meet CAFE standards (re-read that - amazing!) In 2012, 13,497 Chevy Volts and 4.228 Nissan Leafs have been sold (all that pent-up demand) as the CBO notes that despite the $7,500 subsidy, the cost-differential to conventional cars remains too wide - inferring a $12,000 tax credit would be more comparable.


Via Reuters: US electric car policy to cost $7.5 bln by 2019-CBO

U.S. government standards mandate that by 2025, automakers to show corporate average fuel economy (CAFE) of 54.5 miles per gallon or about 39 miles per gallon in real world driving.

... The federal tax credits apply to the first 200,000 electric vehicles sold by each manufacturer. But these sales will leave room for automakers to continue to sell models with low fuel economy, the CBO said.


"The more electric and other high-fuel-economy vehicles that are sold because of the tax credits, the more low-fuel-economy vehicles that automakers can sell and still meet the standards," according to the report.




While drivers of these electric vehicles use less gasoline and emit less greenhouse gas such as carbon dioxide, the cost to the government can be high, the CBO found. The U.S. government will spend anywhere from $3 to $7 for each gallon of gasoline saved by consumers driving electric vehicles.




The costs of electric vehicles -- fully electric and plug-in hybrid electric -- are much higher than similar-sized gasoline vehicles, and the federal tax credit of $7,500 per vehicle is not enough to bridge the gap, the CBO said.


The CBO said an average plug-in hybrid vehicle with a battery capacity of 16 kilowatt-hours is eligible for the maximum tax credit of $7,500.


"However, that vehicle would require a tax credit of more than $12,000 to have roughly the same lifetime costs as a comparable conventional or traditional hybrid vehicle," the CBO said.

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A Lunatic's picture

Fuck government subsidized pie in the sky bullshit.

markmotive's picture

Some call it peak oil.

Interview with Richard Heinberg on the oil depression to come:

A L I E N's picture

I don't know about electric cars, but solar is economical without subsizies.  Its ability to hedge electrical rates for 40-50 years is appealing given expected inflation.  Especially if are selling back to the utility..

derek_vineyard's picture

I'll bet they did not factor in useful life (1 month - 2 years) and downtime (bicycle racks/bicycles and rental car credits) in this calculation.

I would only take a volt for free and just as a novelty to use a few times for laughs.

Paul E. Math's picture

I would not take a Volt for free because there is no such thing as free.

For those interested, John Petersen is the preeminent expert in the energy storage business and has an excellent catalog of articles on this subject that encompases electric cars on, holding nose, seekingalpha.

Oil is not the only resource reaching its peak.  The non-ferrous metals required for EV batteries are also at or near a peak and for this reason electric cars cannot possibly scale. 

If a significant amount of electric vehicles hit the roads the demand for copper, aluminum, cobalt, zinc, etc would sky-rocket and the cars would need much much more that a $7,500 subsidy to make them anywhere near affordable.  And think of what that would do to the price of everything else that uses these metals as an input - the notion of electric vehicles threatens the entire economy.

Unfortunately, the only future for transportation is efficiency improvement.  Boring but most of reality is.


MetalFillBoy's picture

. . . solar is economical without subsizies.

 Prove it.  Show me the math.



redpill's picture

The Volt is a punch line.
The irony is that someone with $100k to spend on a car can get a top of the line Tesla that's not only a class leader in performance (yes, including gasoline cars) but is eligible for a $5k giveaway from the Feds. Lol. I just may get one if I can ever manage to give up my bimmer.

francis_sawyer's picture

A Volga in every comrades garage...

aerojet's picture

Who the hell except rich people has 100 large to spend on a car?  And rich people don't care about gas prices.

DCFusor's picture

Are you cute, then?

What do we spend on military in money and lives to keep gasoline at it's current high price, and no higher?


Anyone honest would figure that in, you know.

Overfed's picture

That money is being spent to insure that oil is bought and paid for all over the world with US dollars. Having a steady supply to the US is secondary.

You might want to look up hedgemony some time.

Overfed's picture

I guess I had "hedge" on the brain. Thanks for smacking me for a typo.

ACP's picture

It's not bad. Just needs better tires for traction on the golf course.

Urban Roman's picture

But don't pee on the electric fence.

Papasmurf's picture

Be careful fucking volts.  You could end up with a frilly dilly.

Mr. Fix's picture

Wow, I tried to edit it, and it wouldn't let me.

 What I was trying to say,

 is that nothing our government has done in the interest of promoting their agenda has worked.

 The only thing we can do now is take a second look at their agenda.

 I suspect that it is not what it appears to be. 

 Every single policy of our current administration has been designed to inflict as much economic damage on our country as possible.

 The evidence is in,

 the current administration is actively working against our country's best interests.

 There can be no other possible explanation.

 Nobody could possibly be as stupid as they appear to be!

Okay, I'll give the vice president a pass, he really is as stupid as he appears to be.

Cabreado's picture

"Nobody could possibly be as stupid as they appear to be!"

It's not a person being stupid... when a large and complex organization of any kind takes on a behavior of its own.

Notice how the persons involved are insulated now...

There is always a Wall to be hit, eventually, when the persons involved put personal gain above the mission.

One would think the mission was important enough, and one would think the compensation and benefits (of all kinds) provided those entrusted to watch over it would be enough...

There is nothing new going on -- we've just happened to hit the Wall, again.


TheSilverJournal's picture


  1. Get elected.
  2. Pass laws that benefit those who get you elected.
  3. Help get your friends elected.
  4. Get your friends to pass laws that benefit those who helped you help your friends get elected.
  5. Repeat step 1.
RickC's picture

Agreed.  I have come to the conclusion that our politicians are extremely self centered.  Their primary concern is themselves.  They pursue power, recognition, campaign funds, insider trading, and their next, much higher paid job.  Their only interest in the voters is for their vote.  That is how candidate can mold their campaigns toward various interest groups, do nothing they promised after being elected, and then, make the same campaign promise again. 

JohnG's picture

"Nobody could possibly be as stupid as they appear to be!"

Yeah.  Every time I say that about my son he tops himself yet again....

Every time.

Umh's picture

I have sons and understand. People just don't seem to be able to learn from the experiences of others which may explain this repeat of the great depression.

Harbanger's picture

I'm certain your poor son would have chosen a better father if he could.

Peter Pan's picture

I feel sorry for you and your son. I have told my boys that only two things can ruin them. The pursuit of a quick buck or the pursuit of a quick fuck. Apart from that my wife and I teach by example and very little by way of lecturing. They have been told that their genes contain elements of many generations and that they must make a choice of which genes they will bring out in themselves.

Hobbleknee's picture

Change "current administration" to "every administration" and you're on to something.

nickt1y's picture

It is the Cloward Piven strategy. Read about it.

Hayabusa's picture

Finally, Mr. Fix tells it the way it is:  "Every single policy of our current administration has been designed to inflict as much economic damage on our country as possible. The evidence is in, the current administration is actively working against our country's best interests. There can be no other possible explanation. Nobody could possibly be as stupid as they appear to be!


Mr. Fix is right... first inflate the $$, steal as much as possible from the 99% via inflation and when they are just short of starving/rioting "save them" with a "new plan"... one that benefits them and subjugates you all of course.

neidermeyer's picture

This has always been the case with CAFE , It has made the automakers build bigger heavier "light" trucks (over 7500 GVWR) to take them out of the computation ... so that they have less problems meeting the standards on the remaining mix of cars.. in the end its a net negative for fleet fuel economy.

docj's picture

Government: inventers of The Inverse Midas-TouchTM.

Is there anything that government touches that does not turn to shit? Anything?

DaveyJones's picture

and they touch a lot of shit

Overfed's picture

The shit just gets even shittier! :-)

Urban Roman's picture


Shit just gets real

Midas's picture

The kind of money they are throwing around could go a long way to building out a natural gas network.  Too bad we don't elect engineers...

Harbanger's picture

That's a myth.  Carter served in the Navy and received a BS degree from the Naval Academy.  That does not make you a PE.  But he did get a Nobel peace prize.

Umh's picture

Not being a political history geek; I just learned that Hoover had only been in office 8 months when the "great depression" hit. Some how I don't think it was his fault!

Colonel Klink's picture

Maybe that should be Myass touch.  It all turns to shit.

I wished government would just fucking shrink to the size of a pea.  Do ONLY the things the Constitution says they're responsible for and nothing more.  What a waste of skin and air.

Umh's picture

Do you have any idea how we can prevent the federal government from taxing people/citizens and then giving the money back to the state and localities with so many strings attached?

Urban Redneck's picture

Eliminate the Federal government's ability to tax, but that was the whole reason they wrote the Constitution in the first place, since the US government under the Articles of Confederation was neutered and had to beg the State governments for money.

Ace Ventura's picture

Amazing how reading the federalist vs. anti-federalist writings of the period really demonstrate the several flaws written into the Constitution. Had it not been for the insistence of adding the Bill of Rights, methinks we would have reached the current authoritarian state much earlier in our history. Not that the BoR means diddly-poo these days, just that it slowed the inevitable march towards tyranny that started back in 1787, and really accelerated in 1861, then juiced again in 1913, with the pedal finally hitting the firewall in 2001.

I'd be all for reinstating the Articles of Confederation.