One of the core components of President Joe Biden’s infrastructure bill is adequately preparing the country for the electric vehicle (EV) revolution. The Biden Administration has earmarked $174 billion for transportation electrification, which has sparked a flurry of investment from auto manufacturers.
GM announced they will open a $2.3 billion plant in 2023 to manufacture 500,000 EV batteries, Honda has committed to only sell EVs by 2040, Hyundai will invest $7 billion for US EV production, and Ford has announced that half of all Lincoln vehicles produced could soon be emissionless. Even here in Alabama, Mercedes has committed to hiring an additional 400 workers at its Tuscaloosa County plant to keep pace with the demand for EVs
But unfortunately for consumers in Alabama, poor policy at the state level is acting as a major hurdle for the EV boom. Alabama, which currently ranks tied for last in the US Electric Vehicle Accessibility Index, is actively discouraging the purchase of EVs with their ban on direct-to-consumer sales, and their disproportionate licensing fee for electric and hybrid vehicles.
Under the guise of consumer protection, Alabama has made it illegal for electric vehicle manufacturers, like Tesla, to sell directly to consumers. Dealer franchise laws, which ban direct sales, are a decades-old policy implemented to protect consumers from vertical integration and monopolization. In today’s age of limitless information at your fingertips, and healthy competition in the auto industry, this restriction is far past its expiration date. It does nothing but impede consumer choice while providing no consumer protection value.
That’s why many EV manufacturers have opted out of the dealership model entirely. Due to the innovative nature of electric vehicles, a traditional franchised dealership model may not be the most effective way to get these eco-friendly vehicles to market. Operating a stand-alone dealership increases costs, and adds a middle-man to the sale process, which can often inflate prices for consumers. And, we know from the success of direct-to-consumer platforms in the used car market (where direct sale is legal), that online purchasing is on the rise.
Beyond the ban on direct-sales, Alabama also punishes EV consumers with higher license and registration fees. The standard registration fee for vehicles in Alabama is $65. For consumers making the eco-conscious choice to buy and register an EV, the registration cost is over 300% higher at $265. This is incredibly discriminatory, and a much better approach would be to simply treat EVs on par with standard gas-powered vehicles.
Unfortunately, some legislators have justified the additional fee to help recover lost gas tax revenue, but that runs counter to the purpose of gas taxes. The purpose of the gas tax, currently at 26 cents per gallon in Alabama, is to encourage consumers to reduce their emissions, which is exactly what EV consumers are doing when they purchase an EV. It’s strange that the reward EV consumers get for their eco-friendly decision is inflated fees exponentially higher than the alternative. It is unfair that these consumers now shoulder more of the financial burden when they are in fact responding to gas taxes as intended.
On top of being relatively easy to implement, these policy changes have the added benefit of encouraging EV purchases without taxpayer manufacturing subsidies, or complicated tax credits, which have rightfully been criticized for favoring the wealthy.
At the end of the day, the EV revolution is well on its way. By simply getting out of the way, legislators in Alabama could enhance consumer choice, lower costs, protect the environment, and do so without all of the logistical and ideological issues that come with corporate welfare and boutique tax credits.
As the famous idiom goes, “a rising tide lifts all boats”. The tide is certainly rising for electric vehicles, but with misguided regulations handcuffing consumers, Alabamians may end up watching from the shores.
Originally published here.