Are Electric Cars Helping or Harming the Economy?

There are more than a million electric cars owned in the United States. People are investing in electric cars because of the money-saving potential in the long-term. Electric cars are also more environmentally friendly compared to conventional vehicles.

While there are undeniable economic benefits from using electric cars, there are some potential drawbacks as well, ranging from infrastructural needs to personal injury.

Jobs

When we look at electric cars and the economy, we need to examine the jobs created and jobs lost. 

Producing electric vehicles is only one area in which new jobs are created. Many industries will see an increase in jobs as the number of electric vehicles increases.

Industries that may see an increase in jobs include, but are not limited to:

  • Scientific research
  • Design and development
  • Manufacturing of vehicles and components
  • Electric vehicle maintenance
  • Infrastructure development
  • Sales and support

Even though the number of new jobs created by electric vehicles, there may be some industries that see a decrease in jobs. For example, jobs may be lost in the conventional vehicle industries and the oil industry. 

However, many studies indicate that the economics of electric vehicles indicate there will be net job growth from increasing the number of electric vehicles in the United States. 

Manufacture

While the benefits of electric vehicles outweigh the cost of the vehicle for many consumers, electric vehicles continue to cost more than conventional vehicles. One reason is that it costs more to manufacture electric vehicles than it does to manufacture conventional vehicles. 

However, the cost to manufacture an electric car decreases as production volumes increase. Batteries are one of the most expensive costs to manufacture electric vehicles. However, as battery technologies continue to improve, the cost to manufacture an electric car may decrease. 

Additionally, as the market expands, it leads to more competition. More competition leads to better designs, innovations in manufacturing, and lower costs. 

Infrastructure

While creating the infrastructure to support wide-scale electric vehicle usage creates jobs, it also can be costly. Electric vehicles need charging stations. Individuals that have electric vehicles can use home charging stations.

However, there is also a need for public charging stations, just like there is a need for gas stations. The cost of building public charging stations is borne by a variety of entities and organizations. According to the U.S. Department of Energy, parties working to establish a national network of charging stations include:

  • Automakers
  • Clean Cities coalitions
  • Government agencies
  • Utility companies
  • Charging equipment manufacturers 
  • Municipalities

It is unknown how much of the cost of building infrastructure for electric cars will fall on taxpayers. Numerous companies and organizations receive grants and other incentives to develop infrastructure for electric vehicles. Utility companies may also pass some of the cost of running new lines to consumers.

The relationship between electric cars and the economy may not be fully understood until the actual cost of infrastructure on the average consumer or taxpayer is known. 

Pollution

The main selling point for switching to electric vehicles is that it is better for the environment. However, do electric cars really save the United States that much money related to pollution?

Most people can agree that decreasing pollution is one of the benefits of electric vehicles. However, it is important to keep in mind that the economics of electric vehicles focus on the actual costs saved related to pollution. 

According to Stanford Earth, pollution costs the U.S. approximately five percent of the yearly gross domestic product in damages. In 2014, that totaled $790 billion. The high costs come from early deaths because of exposure to pollution.

However, in recent years, the damages from air pollution have fallen as outdoor air pollutants. Since one of the benefits of electric vehicles is that they do not produce carbon dioxide emissions when driving. Most of the pollution created by electric cars occurs during the manufacturing process.

Therefore, if electric cars can help reduce pollution, they can have a positive effect on the economy. 

Safety

Car accidents are a common cause of serious injury in the United States. While, to a degree, safe driving habits can prevent this, the safety of the car itself is also a factor.

For that reason, all motor vehicles must go through the same safety testing and meet the same basic standards. Therefore, electric vehicles sold in the United States must meet the same standards as conventional cars. 

A consumer needs to compare the standard and added safety features of an electric vehicle before purchasing a car. For instance, does the electric car have side airbags, adaptive cruise control, forward collision warning, and other advanced safety features. 

However, one concern with electric vehicles is that they are much quieter than conventional vehicles. Pedestrians and bicyclists may not hear an approaching electric vehicle, which could increase the risk of a car accident. Also, operators may not be aware that the vehicle is still running when they exit the car.

If you are involved in an accident with an electric vehicle, try to document the accident scene. Take photographs and make a video before the cars are moved, if possible.

It is also important to note that it is especially important to collect witness statements after an accident in an electric car, as your insurance rates are likely higher than average.

Consumer Costs

The financial benefits of electric cars are arguable. The purchase price of an electric vehicle is higher than a comparable conventional vehicle. Also, there are hidden costs of owning an electric car. 

According to Edmunds, the cost of charging a car depends on numerous factors. The cost can vary widely, but the cost of electricity is more stable than the cost of fuel. Overall, it costs less to power an electric car than a conventional vehicle.

However, you have other costs. Most people need a home charging setup. The cost depends on the type of system you choose.

Also, the cost of car insurance may be higher for an electric car. As with other costs, insurance may decrease over time as more people choose electric cars over conventional vehicles. 

Maintenance may also cost more for an electric vehicle. There are fewer repair shops and maintenance facilities for electric cars. Again, this cost may decrease over time.

Do electric cars really save money? Are electric vehicles worth it? 

In short, the upfront costs can be expensive. The fuel costs over the lifetime of the vehicle are lower, but some other costs might be higher until electric cars become a more substantial portion of the total vehicles on U.S. roads.

Tax Credits

The federal government offers a tax credit for purchasing an electric car. The minimum credit amount is $2,500 but could be up to $7,500. There are also several state laws and incentives for purchasing an electric car.

It is not clear whether a tax credit is a good long-term investment for the economy. Because the electric car industry continues to evolve, the economics of electric vehicles will also continue to change and evolve.