Friday, May 31, 2013

Federalism in Action: Two States' Approach to Electric Cars

California and North Carolina are quite different in many ways, and now we can include their approach to electric cars. California has launched an aggressive subsidy program to get motorists to to rethink the internal combustion engine. From the LA Times:
Want to pay $7,000 for a $37,000 electric car?

It's not a trick question. For the first time, through the magic of subsidized leases, electric vehicles can now compete on price with comparable gas-powered cars — indeed, they are cheaper once you factor in gas savings.
Honda announced this week that it would drop the lease on its Fit EV from $389 to $259 a month. That price includes collision and vehicle theft coverage, maintenance, roadside assistance, even a charging station at your house. Factoring in the state rebate, that's an all-in, three-year ownership cost of less than $7,000 — maybe the cheapest $37,000 car in history.
If you're looking to buy, state and federal incentives can shave as much as $10,000, nearly a third of the sticker price on a typical model. But automakers and most consumers have turned to leases to ease fears about uncertain long-term maintenance and resale values.
Credit California's tough pollution laws for the EV price war. The California Air Resources Board has mandated that zero-emissions vehicles must constitute 15% of all new vehicle sales by 2025, up from less than 1% now. That has automakers scrambling to get consumers into a set of green wheels, even though they are losing money on every car.
The goal is to boost consumer demand in the nation's largest auto market, hoping that bigger sales can spur research and development to lower the technology's cost.
Meanwhile, in North Carolina:
RALEIGH—North Carolina drivers who use hybrid cars could end up paying for it in the long run.
State lawmakers in the Senate have proposed drivers pay an additional fee if they drive a hybrid or electric car.
They are the car industry's answer to going green. Gas prices are a big reason the hybrid cars have become more popular but if you own one in North Carolina it could cost you.
"The old system of collecting money for our roads is outdated. If this is the best way that we can do that then we're going to be in some trouble for a very long time," said NC Sierra Club Communications Director Dustin Chicurel-Bayard.
One item in the Senate budget calls for drivers to pay an additional fee when they renew their car registration. For hybrid cars the fee would be $50, electric cars the fee would be $100. Since hybrid cars use less gas supporters say the fees would help the state collect that money they lose from the gas tax back in order to fund road projects.
You may or may not agree with either of these approaches to electric and hybrid cars. The goals from each state are very different, which is what we should expect with localized decision making. I suspect those most concerned with the environment will appreciate California's subsidies (some subsidies come from the automakers). Those concerned with how to pay for transport infrastructure may favor the North Carolina model. Both sets of policies have positive and negative attributes, but these are examples of how policy targets will vary across states as (more accurately: if/when) the federal role in transport finance declines.

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