Talking Points on the reconciliation bill, part 3: EV subsidies

By Alex Epstein

This is part 3 of my series “How passing the reconciliation bill will destroy American energy.” This horrific bill has at least 6 energy-destroying policies that alone should disqualify it from passage—including the increase in electric vehicle subsidies.

The reconciliation bill’s increase of EV subsidies to $12,500/car will loot the middle class, overload our grid, and make us even more dependent on China—all with little effect on CO2 emissions.

Quick Summary

  • The proper policy toward EVs, which are promising but not cost-effective for the vast majority of Americans, is 1) let them compete on a free market and 2) make sure we have plenty of low-cost, reliable electricity. The reconciliation bill fails on both counts.
  • Instead of letting EVs compete to become cost-effective, the reconciliation bill increases the tax credit for EVs—which favors those wealthy enough to afford EVs—from $7,500 to $12,500, and spends billions of taxpayer dollars on charging infrastructure for EVs.1
  • Today's EVs are not cost-effective for the vast majority of Americans. That's why despite huge government subsidies, only 2% of us buy EVs. $5K more in subsidies won’t change that—it’ll just mean that the middle class subsidize wealthy people’s EVs even more.2
  • The reconciliation bill’s $12,500 subsidy to wealthy EV drivers at the expense of the middle class is even more perverse because EV drivers don’t have to pay the gasoline taxes that pay for roads and bridges.3
  • The idea that mandating EVs is some magic way of rapidly reducing CO2 emissions is absurd, because 1) EVs are largely FFVs--fossil fueled vehicles, and 2) The world, especially China and India, is going to keep using fossil fuels to develop and prosper.4
  • If you use an EV, it is powered with whatever sources of electricity are on your regional grid. Just as important, it was produced with whatever sources of energy power mining equipment, materials processing facilities, and factories. Most of those sources are fossil fuels.5
  • Because there is no truly cost-effective, global-scale alternative to fossil fuels, today's EVs are mostly fossil fueled--from the electricity powering them, to the coal used to manufacture them, to the oil used to mine for their raw materials.
  • Because today's EVs are largely FFVs--fossil fuel vehicles--in most places replacing a gasoline vehicle with an EV yields at most minor emissions reductions. But as EVs are often bought as supplements to a longer-range gasoline vehicle, buying a new EV often increases emissions.6
  • Subsidizing EVs $12,500 apiece amounts to forcing Americans to pay billions of dollars to Tesla and other EV makers to build wealthy people a new second, third, or fourth car--powered by mostly fossil fuels. This is the least cost-effective way imaginable to reduce CO2 emissions.
  • The proper, just policy toward battery EVs is to let them compete on the open market with gasoline vehicles, natural gas vehicles, hydrogen vehicles, etc. And have companies and customers pay for charging infrastructure, just as we do for gas stations.
  • One crucial benefit of a free market for EVs is that we will avoid having more EVs than our grid can handle. This is especially important right now because this administration is making today's bad grid problems--increasing costs and decreasing reliability--far worse.
  • Thanks to government mandates and subsidies, solar and wind--"unreliables"--provide about 10% of American electricity. This 10% has already caused big electricity price increases and huge reliability problems. Politicians should admit their failure, apologize, and reverse course.7
  • Instead of admitting that the US's 10% solar+wind electricity is causing huge cost and reliability problems, the reconciliation bill quintuples down on this disaster with the goal of "80% clean," which would mean minimum 50% solar+wind in 8 years!!
  • Too many EVs and not enough electricity is a recipe for immobility. Imagine if, this past February, the reconciliation bill was in effect and TX was far more dependent on unreliable solar+wind and had a massive fleet of EVs. The blackouts would have been far more devastating.8
  • If we scrap the reconciliation bill, EVs in the future could benefit Americans and significantly reduce emissions if 1) competition makes them genuinely superior 2) we dramatically increase electricity production using a low-cost, reliable technology--most likely nuclear.
  • If the Biden Administration wants to facilitate cost-effective EVs, the number one thing it needs to do is scrap this reconciliation bill's attempt to force 50% solar and wind on us--which would absolutely destroy our grid for existing electricity needs, let alone huge EV needs.9
  • If the Biden Administration wants to facilitate cost-effective EVs, the second thing it can do is focus on decriminalizing and liberating nuclear energy--so that there is finally a scalable, non-carbon technology that can power EVs.10
  • This administration's solar-and-wind mandating, EV-subsidizing policies also sacrifice our energy security to China--whose 84% fossil fueled industry dominates the supply chains for solar panels, wind turbines, and batteries.11
  • Summary: The reconciliation bill’s increase of EV subsidies to $12,500/car will loot the middle class, overload our grid, and make us even more dependent on China. We must scrap this bill and create a bill to liberate American energy, including nuclear energy.


  1. U.S. House of Representatives Rules Committee - Build Back Better Act — Rules Committee Print, Section-By-Section
    Environmental Defense Fund - What We’re Watching in Reconciliation: Regular Updates from EDF

  2. Pew Research Center - Today’s electric vehicle market: Slow growth in U.S., faster in China, Europe

  3. “In 2019, the National Bureau of Economic Research published a study that found the average household income of EV buyers was about $140,000. That’s twice the median household income in the U.S., which was nearly $69,000 in 2019. The average owner of a Tesla Model S has a household income of about $153,000.“
    Robert Bryce - TESTIMONY BEFORE THE UNITED STATES CONGRESS House Select Committee on the Climate Crisis

  4. Alex Epstein - Talking Points on CO2 Emissions

  5. BP Statistical Review of World Energy 2021

  6. Swedish Environmental Research Institute - New report on climate impact of electric car batteries

    ”Even in Europe, the overall life-cycle emissions savings are limited as "[a]n average electric vehicle in Europe produces 50% less life-cycle greenhouse gases over the first 150,000 kilometers of driving, although the relative benefit varies from 28% to 72%, depending on local electricity production" but this goes down to 29% "[w]hen comparing to the most efficient internal combustion engine vehicle."
    The International Council on Clean Transportation - Effects of battery manufacturing on electric vehicle life-cycle greenhouse gas emissions

    Car and Driver - Average EV Owner Drives Half as Many Miles as Other Drivers—Study

  7. In 2019 US net electricity generation from solar and wind was 9.7% of total.
    U.S. Energy Information Administration - Electric Power Annual

    Alex Epstein- Energy Talking Points on the Texas Electricity Crisis Alex Epstein - Energy Talking Points on California Blackouts

  8. Alex Epstein - Talking Points on the Texas Electricity Crisis

  9. Alex Epstein - Talking Points on the reconciliation bill, part 1: "80% clean electricity by 2030"
    Alex Epstein - Talking Points on the "Other countries have 80% clean electricity" argument

  10. Alex Epstein - Talking Points on CO2 Emissions

  11. Alex Epstein - How the Biden Administration threatens energy security