Photo by Waldemar Brandt on Unsplash
By Michael Busler, Ph.D., public policy analyst, economics expert and a professor of finance at Stockton University.
Special to the USA TODAY Network
In yet another misguided attempt to make the Garden State “greener,” the New Jersey Department of Environmental Protection (DEP) recently proposed a regulatory rule that would ban the sale of new gasoline-powered vehicles by 2035. Constituents and consumers alike should be wary of this clumsy attempt by policymakers to plant New Jersey’s flag as the preeminent supporter of electric vehicles.
New Jersey’s move raises questions about the government meddling in the market while pushing policy agendas over consumer freedom and consumer choice. Despite $30 million in annual taxpayer subsidies through New Jersey’s Drive Green program the Garden State only has 31,000 zero emissions vehicles on the road as of June last year.
The fact is electric vehicles are too expensive for average families. Limiting consumer choice to only electric vehicles may price people out of cars altogether (perhaps a secondary goal of such a mandate) or force them to pay more money for something they don’t want.
According to research from Quartz the average price of a new electric vehicle is significantly higher than a new gasoline powered vehicle. Families who are barely struggling to make ends meet due to the economic disruptions of COVID-19 will be unable to afford this additional expense. Alternatively, such a mandate may just push consumers to visit neighboring Pennsylvania or Delaware to purchase a gasoline powered vehicle, depriving the Garden State of tax revenues and needlessly sending thousands of car salesmen to the unemployment lines.
Further, creating scarcity in the marketplace and limiting consumer choice to fewer options rarely causes prices to become more affordable. New Jersey’s subsidy program could incentivize electric car companies to capture extra revenue by lowering prices slowly and hoping subsidies increase. Companies would in effect not only capture these subsidies but could influence them with pricing behavior. Equally concerning are the perverse incentives subsidy programs perpetuate. In January, the PSE&G approved a plan to spend over $166M on EV infrastructure over the next six years. The funding serves to rectify the state’s plan to build out charging infrastructure for EVs, which is troublesome considering that the move will likely translate into additional subsidies or EV mandates in the future.
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