Sen. Chuck Schumer Proposes Billions in Government Handouts to Kill Gas-Powered Cars

Say hello to "Cash for Clunkers 2.0."

"By 2040 all vehicles on the road should be clean," says Sen. Chuck Schumer (D–N.Y.).

Schumer outlines his "Clean Cars for America" plan in an article for The New York Times. "Scientists tell us that to avoid the most devastating effects of climate change, the world needs to be carbon neutral—to have net-zero carbon dioxide emissions—by midcentury," he writes. "At the moment, we are not remotely on track to meet that target."

In a statement to Reuters, Schumer listed three actions the government needs to take in order to get American emissions to meet his target. First: Give Americans a discount of up to $5,000 (with an additional $2,000 for low-income Americans) when they trade in their gas guzzlers for an electric car. Second: Invest $45 billion in charging stations throughout the country. Third: subsidize automakers with $17 billion to increase production of electric vehicles (EVs). Altogether, Schumer predicts his 10-year plan will cost about $454 billion to implement.

Schumer's article cites China's commitment to EVs, but the jury is still out on whether that country's increased production of EVs has been as beneficial to the environment as the senator seems to think. For example, a 2017 study found that EV production in China is about 60 percent less efficient than China's production of gas-powered cars. This is mostly due to environmentally destructive components that EVs require, such as their lithium-ion batteries, which require several rare metals to create. Until EVs can be manufactured more efficiently, their production will still contribute significantly to environmental degradation.

Once they're out on the roads, EVs do emit less tailpipe emissions than gas-powered cars do. But EVs' hidden environmental costs, such as charging stations that have their electricity generated by burning fossil fuels at power plants, make them less than optimal for creating a carbon neutral world in three decades. In California, the state where EVs are most popular, installing a dedicated EV charging circuit to one's house has the same effect as adding a house to the electricity grid.

Schumer claims that his plan will "create tens of thousands of jobs." But Jeff Schuster, an official at the auto parts supplier LMC Automotive, has told the Associated Press that a shift in production to electric vehicles will result in a 50–75 percent reduction in the engine and transmission workforce, since the batteries and motors of EVs are much less complex to assemble than traditional powertrain components. Schumer apparently wants to mitigate this possible effect by shifting those workers into building new EV plants and charging stations throughout the country. But those jobs will disappear after the plant or charging station is completed. Needless to say, that's no reason not to embrace new technology—but it is a good reason not to overpromise the jobs that technology will create.

Schumer also contends that his plan will make electric vehicles more accessible for average Americans, who are allegedly priced out of the electric car market. While it's true that electric vehicles are still pricier than their gas-powered counterparts, it's less clear that we need government to make electric cars more affordable. From 2018 to 2019, prices for new electric vehicles fell by 18.8 percent, from $68,562 to $55,646, mostly because Tesla reduced the price of its Model 3. Interestingly, Tesla cut the Model 3's price largely because people were losing a government benefit—the federal tax credit for buying an electric car was halved.

Other governmental handouts meant to lessen automobiles' environmental impact have done poorly. Take 2009's "Cash for Clunkers" program, which subsidized automakers and gave money to citizens who traded in their gas-powered cars. "Cash for Clunkers" removed an estimated 690,114 used cars from the market, but it also contributed greatly to surging used car prices in 2011. It's basic economics: Decrease the supply of a good, and the demand for it goes up. In the auto market, this meant higher prices—and making life more difficult for those who could afford only decades-old technologies.

Schumer's plan would repeat those mistakes. And it would impose yet more burdens on auto workers and low-income Americans by euthanizing the gas-powered vehicle market before it's ready to die.