Biden’s EPA Proposes Its Most Paternalistic EV Rule Yet

T he central planners in the Biden administration aren’t satisfied with the current rate at which consumers are buying electric vehicles (EVs), so the EPA just published a proposed rule that will require auto manufacturers to reduce their production of gas-powered cars if they don’t sell enough EVs.

This roundabout plan to curtail the use of conventional cars utilizes the EPA’s tailpipe-emissions scheme, which sets average pollution targets for an auto manufacturer’s entire fleet. If manufacturers can’t innovate emissions away to meet the agency’s proposed, stricter targets, they are forced to sell more EVs or cut back on internal-combustion engines. When manufacturers can’t move enough EVs out the door at a profit, they’ll simply mothball production of conventional cars to manipulate their fleet-wide emissions average.

And forcing a fall in regular car production is precisely the EPA’s goal. The proposed rule would progressively tighten light-duty vehicle carbon dioxide targets from 186 grams per mile in 2026 down to 82 grams per mile in 2032, cutting greenhouse-gas emissions by 56 percent. Of course, this will hurt consumers — agency officials predict that it would raise costs by around $1,200 per vehicle and reduce the overall number of cars sold through 2032. However, it will also likely see EVs climb to become 67 percent of new car sales, thus advancing the Biden administration’s agenda. In the words of Marie Antoinette: If consumers can’t buy the vehicles they want, let them drive Teslas.

In all seriousness, though, this latest effort marks an especially paternalistic step in the administration’s EV drive. Sure, the so-called Bipartisan Infrastructure Law of November 2021 dedicated $7.5 billion of taxpayer money to funding an electric-vehicle-charging network. And the Inflation Reduction Act blew the unit cap off the $7,500 EV-consumer tax credit. But these initiatives did not try to restrict consumer choice on the grounds that the bureaucracy knows best what people should be buying.

But that’s precisely what this new proposed rule does, and considering that the EPA’s analysis justifying the policy is littered with overly optimistic assumptions, the true impact on consumers could be even more severe than expected. For example, the EPA assumes away 20 percent of the sales price of an EV sedan through the federal $7,500 EV-consumer tax credit. However, that credit is contingent on a variety of origin requirements for battery components and the critical minerals within them, of which most EVs currently fall short. What happens then?

Ultra-long commodity-price predictions also muddle the EPA’s analysis. The agency predicts, for example, that the price of electricity used to charge electric vehicles will remain stable or fall in the coming decades, while gasoline prices will surge. Yet, according to the monthly Consumer Price Index report that was released on the very same day as the proposed rules, gasoline prices had fallen 17 percent over the past twelve months, while electricity was up 10.2 percent.

So, while the EPA describes these stricter standards as new and ambitious, it is important to remember that there is nothing novel about the state attempting to dictate consumer preferences. There’s nothing good about it either. As a 1981 report on the Soviet economy by the Congressional Joint Economic Committee shows, when planners’ choices — rather than consumer preferences — determine the diversity of products, “consumers spend inordinate amounts of time standing in line or trudging from store to store in search of desired items.” For an administration supposedly committed to building the economy of the future, this latest EPA regulation is a blast from the past.