Consumer Choice Takes a Back Seat in Federal Push for Electric Vehicles

Mark Green
Posted February 2, 2021

Tucked in one of the Biden administration’s executive orders on climate is a directive to use the federal government’s procurement powers to achieve or facilitate “clean and zero-emission vehicles for Federal, State, local, and Tribal government fleets, including vehicles of the United States Postal Service.” The order also requires that fleet electrification fit with the administration’s support for union jobs and conforms to its “Made in America” principles.

Read below for a look at the facts on challenges linked to the size and scope of the directive, as well as concern that U.S. consumers and taxpayers should have over issues including the ownership costs of zero-emission vehicles (ZEV), battery disposal, infrastructure costs and the potential for increased reliance on automotive components made by non-U.S. based workers.

First, we’ll focus on a fundamental concern, which is the government, in a market-based economy, taking policy actions to push the market and consumers toward a specific policy outcome. Basically, it’s the government picking winners and losers for consumers.

While the president’s order is about electrifying government and tribal vehicular fleets, it’s likely the action also is meant to influence the overall vehicle market (see General Motors’ announcement). Unfortunately, the interests of American consumers and consumer choice take a back seat.

Our position is that because federal vehicle policy is a signal to the overall marketplace, new federal vehicle requirements should be balanced, allowing marketplace flexibility to meet smart efficiency and environmental goals. It should encourage innovation across all vehicle technologies, including with advanced conventional vehicle technologies, to reach those goals. Government should not favor one technology over another.

The Biden administration is selecting a specific technology for the federal fleet, and in the process, it is putting its thumb on the technology scale. The move seems to be politically driven, as there are indications the policy’s benefits would be underwhelming – especially given the amount they could cost U.S. taxpayers. An analysis of then-candidate Biden’s plan to phase out government fleet purchases of conventional vehicles by 2025 and increase ZEVs to 100% of the fleet acquisitions by 2026 found that:

• The net reduction in U.S. transportation sector carbon dioxide emissions over 30 years would be less than 1% (0.06%).
• Fleet energy consumption would decline by just 4% over three decades.
• Taxpayers (federal state and local) would be tapped for the cost – $88 billion over 30 years.

These datapoints raise serious questions as the policy goes forward – small benefits at large cost to taxpayers. Yet, as we’ve said, the policy could crowd out informed consideration of the ways modern, efficient and more environmentally friendly fuels and other technologies are being developed for conventional vehicles – a fleet that includes widely available and affordable choices for American families of all income levels.

Conventionally fueled vehicles today are much more fuel efficient and emit much less carbon dioxide than their predecessors, improving 23% since 2004. Combined with other desirable attributes – including range, flexibility and lifecycle costs – they can compete with electric vehicles.

Indeed, according to this review of scientific analysis, when the full lifecycle of a vehicle and its energy source is considered – including greenhouse gas emissions during fuel production, manufacturing, operation and disposal stages – advanced internal combustion engine vehicles and hybrid electric vehicles can achieve emissions reductions comparable with similarly equipped, full-battery vehicles. From the review:

There is no such thing as a true zero-emission vehicle. As the lifecycle analysis studies below demonstrate, all vehicles produce emissions. … No vehicle, no matter the energy source or powertrain technology, can be produced or operated free of emissions.

Now, let’s consider some facts associated with the administration’s fleet electrification order:

• Scope – The current federal fleet includes about 645,000 vehicles, of which only about 4,500 are electric. The government fleet includes a wide variety of vehicles, from sedans to passenger vans, SUVs, trucks and buses. That’s a lot of fleet to convert, and many electric alternatives are not available. In addition, the executive order suggests purchases of 2.45 million more ZEVs for states, local and tribal governments. So, in all, we’re talking about 3 million vehicles.
• Made in the USA? – While the president wants purchases of electric vehicles to be made in America by union workers, there aren’t any. According to the Washington Post, just three U.S. automakers are turning out electric vehicles and none of them meets the standard for union labor and include at least 50% American-made materials. Tesla isn’t unionized, and GM, while it employs union workers to make the Chevy Bolt, about 75% of the car’s components are made outside the U.S., the Post reports.
• Challenges – A 2019 Government Accountability Office report found significant issues for federal agencies in adopting electric vehicles on a wide scale: the costs of hybrid and electric vehicles and their charging infrastructure; the lack of fuel and infrastructure availability limits agencies’ use of alternative fuel; and the need for larger vehicles limits the number of low-emitting vehicles that can be acquired.
• Spent batteries – Electric vehicle battery recycling is in its infancy and poses unique challenges in terms of materials handling and safety. Currently, less than 5% of lithium-ion batteries, the type most commonly used in electric vehicles, are being recycled, according to a Congressional Research Service report. Battery packs could add 250,000 metric tons of waste to landfills for every 1 million retired electric vehicles.
• Ownership costs – A study conducted by the Argonne National Laboratory a few years ago found the total cost of electric vehicle ownership was nearly triple that of a conventional vehicle – 82 cents per mile for an electric vehicle with a 210-mile battery, compared to 32 cents per mile for the conventional vehicle.

These points suggest the need for a thorough, informed public discussion on America’s transportation future – one that should include all fuel and technology options and prioritize the interests of consumers. Unfortunately, the administration’s executive order is policy arrived at via tunnel vision and without considering the effects on market forces and consumer choice.