The U.S. and China are in a fierce competition over production of electric vehicles. Both countries have dumped major public cash into the fight. But here in the U.S. those federal subsidies on so-called EV's are phasing out. Lisa Fletcher reports whether they should continue is driving a major debate.
In our nation's capital, there is a fast moving debate about whether taxpayers should continue to fuel the electric vehicle industry.
John Bozella: I think this car, and cars like it will be the way of the future.
John Bozella is CEO of Global Automakers, advocating for EVs. He’s driving around in the popular Nissan leaf.
John Bozella: I love the way the car drives.
But the Nissan Leaf, and the darling of the EV industry, Tesla, have a hot competitor in their rear view mirrors: China.
In the last 4 years, China has been outpacing the US in sales, last year selling more than 3 times as many vehicles. Shocking? Perhaps not.
China’s production is subsidized and promoted by the state.
44-year-old William Li and his company, Nio, are leading an aggressive push by the Chinese to sell more electric vehicles worldwide.
Lisa: Clearly they are dominating that market right now and they intend to continue to do so. Is it in our best interest to let them, yet again, dominate another global industry?
Nick Loris: Well, I think it depends on what that domination looks like.
Nick Loris of the Heritage Foundation, has examined China's command of the electric car market.
Nick Loris: I think we can be beneficiaries as consumers if they are making better products. That's not necessarily the worst thing. I don't think the United States is going to out-socialize or outspend the Chinese, and so we need to pick and choose where we are allocating our resources.
But to a degree, in the US, production is subsidized by the state, too - by means of your tax dollars.
Nick Loris: We're paying for these vehicles, not just as federal taxpayers, but also in many senses as state taxpayers as well. Overall, you’re talking about several billion dollars in taxpayer costs.
The big government push to promote electric vehicles started in 2008 under President Bush, and expanded under President Obama. Americans get a federal tax benefit worth up to 75-hundred dollars to buy an EV. That's already added up to 2.2 billion tax dollars in 7 years.
Lisa: Are the subsidies at all helpful - in not just propping up an industry, but actually helping it have long term success?
Nick Loris: I don't think it's a good long-term strategy because then you become dependent on that subsidy.
Surprisingly, some in the EV industry, agree with that criticism. Jason Sauey is chairman of the Nordic company. Among their products, electric golf cars and neighborhood vehicles. Despite benefiting from the tax credit, he thinks they are bad for industry.
Jason Sauey: I suppose when a pig's at a trough feeding they want to continue feeding. It's social engineering by the government and I think that products should live or die on their merits and their performance and the features.
That could soon be the case in the US. The tax credits are starting to phase out for some electric vehicles. And President Trump's 2020 budget calls for stopping the tax credits altogether. So representatives for the electric vehicle industry - like Bozella - are pressing for Congress to keep the money flowing.
John Bozella: I’m a believer that an industry that stops, is an industry that’s not going to be successful in the future.
With electric vehicle sales in the US - and global leadership at stake, Bozella says it's too soon to pull the plug on US taxpayer support for EVs.