Guest post by Bjørn Lomborg

I’ve said electric cars get subsidized too much. Turns out I was wrong.

In California, they are subsidized ridiculously too much.

Tesla gets $45,000 for each car it sells in state and federal subsidies. The Tesla S starts at $69,000, so about 40% of its total cost is subsidies (Tesla isn’t making any big profits).

This is because the California Air Resources Board has mandated that zero emission vehicles should comprise 15% of new-car sales by 2025 — up from less than 1% now. This forces other car companies that can’t comply to pay for credits from Tesla.

“At the end of the day, other carmakers are subsidizing Tesla,” says one analyst.

Remember, the Tesla avoids perhaps 10 tons of CO2 (more likely, with its large battery pack it avoids nothing or even *increases* total CO2 emissions). That means Americans pay at least $5,000 per ton of CO2 avoided – about a thousand times more than the price in the European Trading System.

It also avoids local air pollution (which is presumably the Air Resources Board’s objective), but over the entire lifetime of the car, this is worth around $500.

Source:

Air pollution costs:

For Europe:http://ec.europa.eu/transport/themes/sustainable/doc/2008_costs_handbook.pdf, p57, air pollution for new gasoline cars is about €0.001/km or $150 for 150,000 km;

For France:http://www.internationaltransportforum.org/jtrc/DiscussionPapers/DP201203.pdffor France, p26, shows €634

Danish numbers: DKK 1500 (or about $300) for 150,000km, p147http://www.dors.dk/graphics/Synkron-Library/Publikationer/Rapporter/Miljo_2013/Trykt/M13.pdf

We subsidize electric cars too much:http://online.wsj.com/article/SB10001424127887324128504578346913994914472.html

http://articles.latimes.com/2013/may/05/business/la-fi-electric-cars-20130506

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