Crisis: Transportation

This is the part everybody knows about already because we can see it, but at the same time it is also one of the hardest parts of the problem to fix because ownership is so distributed and because replacing every vehicle today is simply not practical. Even assuming everybody could afford to buy a new car while simultaneously writing off the value in their current one, we can’t make enough EVs to do that, and we do not have a complete range of vehicle options yet for it either.

Carrot or Stick

There are two ways we can encourage more people to switch to EVs and perhaps remove more of the high consumption vehicles from the roads, but they are not going to be popular.

The carrot approach has been tried already with tax rebates and other incentives for EV purchasers depending on where they live. These have been helpful, but they also have limits, and in the case of the US tax rebates, two manufacturers have hit the initial cap, triggering a phase out of the rebate their customers are entitled to.

If we are to make more rapid progress on reducing the greenhouse gas emissions, and other pollution, then perhaps it is time to switch from making it a little easier for people to buy a new EV, and make it less desirable for them to buy a ICE vehicle, new or otherwise.

Registration Fees

Vehicle owners typically encounter two places where they pay taxes for their vehicles. One of those is the annual registration fee (which has different names in different countries, but is essentially the same thing). In California, these are typically based on the value of the vehicle (using a standard depreciation schedule from the last purchase price). In other places they may be based on other attributes.

A proposal for California’s new governor to consider might be to add a multiplier on the current registration fee based on engine capacity. For example, a car with a 5 liter displacement engine would be charged its normal value-based registration fee multiplied by five. That’s the stick element. The carrot element is that an EV would free, and ICE cars with smaller engines, including many of the smaller hybrids, would become more desirable, reducing the overall emissions while the transition to EVs occurs.

Gasoline Tax

The second place car owners encounter a taxes is when purchasing fuel for their vehicles. The amount of taxes paid via fuel is a factor of two things: vehicle efficiency and distance driven. Increasing the taxes on gasoline and diesel, perhaps to the levels seen in Europe, would add another stick that would help to reduce consumption, and there . In the UK, for example, about 70% of the amount paid for fuel is taxes (the exact amount varies as it is a combination of a fixed fee and a percentage tax). The flat rate component would be equivalent to about US$3 per gallon. Then they add 20% VAT on top of the total.

So California, how about adding a $3/gallon environment fee to gas and diesel? Those with hybrids will pay a lot less, those with EVs will pay nothing (there’s the carrot again).