The tide is certainly rising for electric vehicles, but with misguided regulations handcuffing consumers, Iowans may end up watching from the shore line.
A major component of President Joe Biden’s infrastructure bill is adequately preparing the country for the electric vehicle, or EV, revolution. The Biden administration earmarked $174 billion for transportation electrification, sparking a flurry of investment from auto manufacturers.
GM announced it’ll be opening a $2.3 billion plant in 2023 to manufacture 500,000 EV batteries, Honda committed to sell only EVs by 2040, Hyundai will invest $7 billion for US EV production, and Ford announced that half of all Lincolns produced could soon be emissionless. Even here in Iowa, EV consumers can now charge their vehicles for free at the famous World’s Largest Truck Stop on Interstate Highway 80.
Unfortunately for Iowan consumers, poor policy at the state level has created a major hurdle. Iowa, which currently ranks tied for last in the US Electric Vehicle Accessibility Index produced by our organization, the Consumer Choice Center, is actively discouraging the purchase of EVs with a ban on direct-to-consumer sales and disproportionate registration fees for electric and hybrid vehicles.
Under the guise of consumer protection, Iowa made it illegal for electric vehicle manufacturers, like Tesla, to sell directly to consumers. Dealer franchise laws, which ban direct sales, are antiquated policies implemented to protect consumers from vertical integration and monopolization. With today’s digital economy and healthy competition within the auto industry, this restriction is far past its expiration date as it limits consumer choice while providing no consumer protection value.
That’s why many EV manufacturers have opted out of the dealership model entirely. Operating stand-alone dealerships increases costs and adds a middle-man into the sale process, often inflating prices for consumers. And, we know from the success of direct-to-consumer platforms in the used car market that online purchasing is on the rise.
Beyond the direct-sales ban, Iowa punishes EV consumers with higher registration fees. Consumers making the eco-conscious choice with EVs must currently pay the standard registration fee as well as an additional fee of $97.50, although that fee will increase to $130 on Jan. 1, 2022. This is incredibly discriminatory; a better approach would be to simply treat EVs on par with standard passenger vehicles.
Unfortunately, some legislators have justified the additional fee to help recover lost gas tax revenue. The purpose of the gas tax, currently at 32 cents per gallon in Iowa, is to encourage consumers to reduce their emissions. It’s unfortunate that the reward EV consumers get for their eco-friendly decision is inflated registration fees that shoulder more of the financial burden when they are in fact responding to the gas tax as intended.
These policy changes are easy to implement and have the benefit of encouraging EV purchases without taxpayer manufacturing subsidies or complicated tax credits, which have rightfully been criticized for favoring the wealthy.
The EV revolution is here, and by simply getting out of the way, legislators in Iowa could enhance consumer choice, lower costs, protect the environment, and do so without all of the logistical 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, Iowans may end up watching from the shore line.
Originally published here.