Introducing Climate Protection, a new monthly column by Nick Maxwell
A friend of mine just got an electric car, a used Nissan Leaf. Nissan Leafs don’t cost as much as Teslas, especially unused Leafs. Part of his thinking was that he didn’t have to get gas at gas stations. It is charged in the garage of his condo overnight.
My friend has a lot of company. In 2022, electric vehicles accounted for 12% of new vehicle purchases in Washington state, up 40% from 2021. Continued growth of 40% annually would bring electric vehicle purchases to 100% by 2030
Electric vehicle sales are likely to accelerate as Washington state and the federal government sweeten the deal on electric cars. The federal Inflation Reduction Act passed in 2022 includes tax credits of up to $7,500 for new cars and up to $4,000 for used cars for some buyers. Washington State offers a sales tax break on some electric cars and trucks.
Most automakers plan to completely phase out gasoline-powered cars and trucks by 2035. Washington is likely to phase out sooner than other states because Washingtonians are more aware of the harms of climate change. And Washington state has the cheapest electricity. It’s cheaper to drive an electric car here than anywhere else in the country.
By 2030, more than a quarter of the vehicles on the road in Washington state will be electric. Gasoline sales will drop 25% or more. Some gas stations will stop working. This will accelerate the decline in the number of gas stations that has been occurring across the country since the 1980s.
The Washington state legislature has recognized this trend. Less gas sales means less gas tax revenue. Road maintenance depends on gasoline taxes. If nothing was done to make up for lost revenue from the transition to electric vehicles, the Department for Transport would be locked out. To offset the upcoming drop in gasoline sales, the Legislature added car-token fees for electric vehicles. Eventually, nearly all vehicles in Washington state will be electric, and road maintenance will be funded primarily through fees like these electric vehicle tab fees.
As gas stations become harder to find, the demand for gas cars will fall. Gasoline cars will be inconvenient. People buying cars will find trade-in values for gas cars falling. Dropping trade-in values will decrease the amount they can spend on their next car. Business will be tough for dealers and for cities that rely on auto sales taxes because profits and auto sales taxes will temporarily fall. Eventually, gas exchanges will be phased out of the system and profits and sales taxes will be recouped.
Some families buying used cars will find themselves stuck with old gas cars without easy ways to fill their tanks. As gas-powered cars become less and less convenient, auto loan defaults will increase, lowering personal credit ratings and decreasing purchasing power. This problem for the used car market will also take over after gas cars are out of the system. Until then, some used car dealers will go out of business after investing in unmarketable inventory.
All this will probably develop over about 20 years. Even after all new cars are electric, there will still be older gas cars on the road. There is no urgent need for dealer bailouts. No need for a cash-for-gas-powered-clonkers program. One solution is for everyone to be aware that the useful life of a gas car is no longer 20 years. Gas-powered cars can now be expected to be easy to consume for another 10 years or so. If purchasing decisions are based on this understanding, Washington State will gracefully navigate this part of the transition to electric vehicles.
All the disruption to come won’t be a problem for my friend and his new Leaf. Now he’s done trying to get a good trade-in deal on his gas car, and he’s done with gas stations.
– By Nick Maxwell
