Electric car incentives: How the wealthy get unnecessary perks for buying Teslas, Leafs, and plug-in Priuses.

The Wealthy Are Getting Unnecessary Perks for Buying Electric Cars. Call It Green Privilege.

The Wealthy Are Getting Unnecessary Perks for Buying Electric Cars. Call It Green Privilege.

A Closer Look at the New Energy Economy
June 24 2015 11:09 AM

Green Privilege

The wealthy don’t need taxpayer-funded perks for buying electric cars. They get them anyway.

Tesla owners take a ride in the new Tesla D model
Life in the fast lane.

Photo by Kevork Djansezian/Getty Images

We need to talk about green privilege.

All kinds of businesses and people benefit because of their involvement in environmentally friendly technologies. A federal production tax credit flows to people who build giant wind and solar farms. The government has made low-interest loans to battery and car manufacturers and to green power plants, with surprising success. While these programs have costs to the taxpayers, their benefits are often broadly passed on to consumers. The subsidies let utilities offer renewable power at lower prices than they could otherwise. And in some instances, they’re actually progressive. Solar subsidies let the middle- and working-class customers of companies like SolarCity and PosiGen get money-saving solar panel systems on their roofs with no money down.

But many green-related public benefits flow almost exclusively to individuals who are already well off and don’t need the help. These benefits, which have a public expense, can save the fortunate time as well as money—especially when it comes to car purchases. And in the past few weeks, I’ve seen the discomfiting effects of green privilege firsthand.

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Perhaps the most glaring example is the federal tax credits of up to $7,500 that apply to electric cars—like the Tesla—or to plug-in electric hybrids but not to ordinary gas-electric hybrids or cheaper small cars that just get very good gas mileage. From an environmental, social, and economic perspective, it would be smarter to subsidize the purchase of super-efficient, modestly priced gas and diesel vehicles by middle- and lower-income people than to give hedge-fund managers $7,500 for buying a Tesla. But for a variety of reasons—in part because they have the potential to destroy demand for oil as well as the potential to gain emissions-free mobility—electric cars are now privileged as a matter of policy. Your fellow taxpayers will offer you money to get one.

Last month, I went to a Toyota dealership to look at cars (my oldest just started to drive and has appropriated the vehicle I use to get around my town in Fairfield County, Connecticut). In theory, the plug-in version of a Prius should cost a lot more than the regular version—it has a bigger, more powerful battery and extra equipment. But in reality, a lease on the plug-in version was about the same or cheaper. Why? First, the leasing company gets the $2,500 federal tax credit, most of which it passes on to the customer.* And I learned, to my delight, that the state of Connecticut—you know, the one that perennially runs huge deficits—had just set up a new program that will pay out cash to people who buy electric or plug-in electric cars. The state administers a pool of $800,000, funded by its largest utility, to give to residents. And the more electric you get, the bigger the rebate—ranging from $750 for the Prius plug-in to $3,000 for a Nissan Leaf. (Tesla doesn’t have any stores in Connecticut yet.)

In essence, then, the state and my fellow utility customers were indirectly offering to bear a portion of the comparatively higher cost (a plug-in Prius costs about $30,000, compared with $24,200 for the plain hybrid version) of a car that can function (for the first 12 miles of any trip) as an electric car.* Put another way, if you have good credit and some money, the state will help you buy a car that will let you spend virtually no money on gas. In my first month of ownership, I’ve driven about 700 miles in the plug-in—mostly on short trips around town—and have used about 7 gallons of gas.

There’s more green privilege afoot in the leafy environs of Fairfield County. My town, Westport, has a pretty high PQ (Prius quotient) and a rapidly escalating TQ (Tesla quotient)—to the point that there’s now an annual electric (or electrified) car rally. And it’s made its own public investments in encouraging people to go green. Most notably, it has set aside for plug-in vehicles four prime parking spots at the main train station that are equipped with charging stations. The spots are just steps away from the tracks.

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Now, if you don’t live in a tri-state metropolitan area commuting burg, it’s hard to appreciate what a valuable and rare privilege this is. Newcomers to town have to wait several years to buy a permit for one of the lots adjacent to the train station—even the lots that may require a five- or seven-minute walk. Nearby private lots charge up to $15 per day to park. This is a region where people measure their quality of life (and the price of their home) in part based on how many minutes it takes them to get there from Manhattan. Having access to a great parking spot can save you 10 to 20 minutes a day. It can spare you from rainstorms and the indignity of sloshing through snow after a long commute. You can arrive at the train station a few minutes later in the morning and beat the traffic getting out at night—a perk that is worth several thousand dollars to people who are accustomed to valuing (and charging) their time at hundreds of dollars per hour. And when you step into your car at the end of the day, it’s fully fueled.

I was explaining this to a friend I saw on the train and had him follow me to the spots to show him what I regarded to be an absurd and unwarranted privilege—only to see that his Tesla was parked next to my Prius. He had played dumb. Green privilege is something you don’t talk about openly.

But it’s the sort of thing we have to talk about. Because all over the country, there are signs that some drivers are being treated more equally than others. As office buildings install charging stations to bolster their environmental cred, they will likely locate them in prime sports—the easier to plug into the building’s electricity infrastructure. In some states, driving a green car is the ticket to gain entrée to a high-occupancy vehicle lane—even if you’re driving solo. Last week, the California Legislature passed a measure that would raise the number of plug-in cars that can access HOV and car pool lanes while driving with just one passenger from 70,000 to 85,000.

It costs money to save money, as the saying goes. It holds for energy. Across the board, efforts that can save money on energy over the long-term require upfront investments that often put them out of the reach of lower-income people who could most benefit from the long-term savings. Plug-in hybrids, yes. But also home insulation, super-efficient hot water heaters, solar panels, geothermal wells, and electrified cars.

Like many who suffer from green privilege, I’m conflicted about it. I like the personal benefits. I know that incentives and standards can help create a market for new technologies and products, which builds scale and eventually brings down the price for everybody. But I’d be gratified if we could come up with more progressive ways for doing that—even if it means taking away my great new parking spot.

*Correction, July 8, 2015: This article originally misstated that a plug-in Toyota Prius is eligible for a $7,500 federal tax credit. It gets a $2,500 federal tax credit. (Return.)

*Correction, July 9, 2015: The article also omitted the funding source of a Connecticut-administered pool to assist buyers of electric and plug-in hybrid vehicles and misstated that state residents were bearing a portion of those purchases. Because the funding source is the state’s largest utility, the state and its utility customers are indirectly bearing that portion of the purchases. (Return.)