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Tyler Cowen

Buy an Electric Car, Save the Planet? Not Quite

Proposed legislation to subsidize the purchase of EVs may be politically expedient, but it’s not ideal.

How much of a subsidy do you need?

How much of a subsidy do you need?

Photographer: Justin Sullivan/Getty Images North America

It is good to see legislative progress in addressing the effects of climate change, as reflected in the deal announced last week between Senator Joe Manchin and Majority Leader Chuck Schumer. But in some ways the proposal falls short. In particular, subsidies for the purchase of electric vehicles may not be the best way to address global climate change.

The bill specifies a maximum tax credit of $7,500 for a new electric vehicle, extended from the status quo, and a new $4,000 credit for the purchase of a used one.