Layoffs, Higher Prices And Fewer Choices Could Be Consequences Of Biden’s New Policy, Experts Warn
John Hugh DeMastri on April 12, 2023
- Economists and industry experts have expressed concern that the Biden administration’s strict new tailpipe emissions rules would effectively limit the sale of new gas cars in the coming years, raise the prices faced by consumers and risk U.S. jobs.
- Jonathan Lesser, an adjunct fellow at the Manhattan Institute, told the Daily Caller News Foundation that he anticipates electric vehicles will continue to be more expensive than their gas-powered counterparts, thanks to higher input costs including expensive battery components and because “forcing a consumer to buy a product allows manufacturers to raise their prices.”
- “If [Biden’s] policies are successful, we will soon have a choice between buying an [electric vehicle] and not being able to afford a vehicle at all,” Myron Ebell, director of the Competitive Enterprise Institute’s Center for Energy and Environment, told the DCNF.
The Biden administration’s aggressive new rules limiting tailpipe emissions will effectively act as a limit on the sale of new gas-powered vehicles in the long-term, raise the price of cars and put thousands of jobs at risk, according to economists and industry representatives.
The Environmental Protection Agency (EPA) touted the accelerated rate of the industry’s electrification under the Biden administration in a press release Thursday and estimated that 67% of all new passenger cars will be all-electric by 2032 as companies move to comply with the new rules. Similar to recent California regulations, the Biden administration’s new rules would eventually result in Americans being unable to purchase new gas-powered vehicles, Myron Ebell, director of the Competitive Enterprise Institute’s Center for Energy and Environment, told the Daily Caller News Foundation.
“The Biden administration is trying to bend every federal rule they can find to force people into buying EVs,” Ebell said. “There is still a market that allows drivers to buy the vehicles of their choice, but government coercion is rapidly limiting those choices. If [Biden’s] policies are successful, we will soon have a choice between buying an [electric vehicle] and not being able to afford a vehicle at all.”
EPA Director Michael Regan in a statement Wednesday said the administration was “not driving any particular technology out of business” but rather giving markets and industry players “options” to help reach the administration’s “very, very ambitious climate goals.”
John Bozzella, president of the automaker trade group Alliance for Automotive Innovation, questioned whether the EPA’s standards were achievable, even with substantial government support, in a blog post Wednesday. Bozzella questioned whether the EPA considered elements “outside the vehicle” such as supply chains, charging infrastructure and the health of the nation’s electric grid.
“To some extent, the baseline policy framework for the transition has come into focus,” Bozzella said. “But it remains to be seen whether the refueling infrastructure incentives and supply-side provisions of the Inflation Reduction Act, the bipartisan infrastructure law, and the CHIPS and Science Act are sufficient to support electrification at the levels envisioned by the proposed standards over the coming years.”
Even if the transition is possible, it would likely require companies to focus on using preexisting technology to rapidly hit the administration’s goals, as opposed to developing innovative technologies, Ryan Yonk, senior research faculty at the American Institute for Economic Research, told the DCNF.
“At its core the EPA’s proposed regulation forces a timeline for transition that is inconsistent with consumer demand,” said Yonk. “That forced timeline will require auto manufacturers to transition ahead of the demand and to use technology that is already available or developed to meet the mandate.”
Accomplishing this task could result in significant upfront purchasing costs for consumers, with electric vehicles costing between $3,500 to $7,100 more than comparable gas-powered vehicles in 2032, according to a cost-benefit analysis conducted by the EPA. While the agency estimates that consumers can offset this cost with a $7,500 tax credit for purchasing an eligible electric vehicle, new rules from the Treasury Department may make it more difficult for consumers to qualify for the credits now, when many electric vehicles currently available cost more than $50,000, Politico reported.
Jonathan Lesser, an adjunct fellow at the Manhattan Institute, told the DCNF that he anticipates electric vehicles will continue to be more expensive than their gas-powered counterparts thanks to higher input costs including expensive battery components and because “forcing a consumer to buy a product allows manufacturers to raise their prices.” Lesser also argued that it was “absurd” for the Biden administration to expect rural areas to be able to make the necessary modifications to their electric grids to sustain the new vehicles, which would prompt people to hold onto their old gas-powered vehicles.
“Everybody cares about global warming,” Democratic Rep. Debbie Dingell of Michigan told Politico. However, “I’m hearing from too many people in this country — I mean, strong Democrats — that they can’t afford an electric vehicle.”
The agency also estimates that the proposed rules governing passenger vehicles will result in the loss of between 41,600 and 51,800 jobs in the battery electric vehicle and internal combustion engine sectors of the industry, with the majority of the losses being concentrated in the combustion engine sector. Sectors shared by the two could see anywhere from 17,500 to 133,300 new jobs, meaning that there could be “either an increase or decrease in net employment,” according to the EPA.
The proposed regulations were initially supposed to be unveiled by Regan in Detroit, but layoff concerns made some high-level members of the United Auto Workers, a major auto workers union, wary of publicly supporting the administration’s plan, which sent Regan’s announcement to Washington, D.C., The New York Times reported, citing anonymous sources familiar with the situation. Electric vehicles typically require less than half the people to assemble than their traditional counterparts.
“Remember this: a lot has to go right for this massive – and unprecedented – change in our automotive market and industrial base to succeed, especially as 284 million light-duty vehicles across the country (that average 12 years in age) remain on the roads,” said Bozzella.
The EPA did not immediately respond to a Daily Caller News Foundation request for comment.
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