Was the IRA a Good Idea?

First, let me say that I am very pro-EV. I built one over 25 years ago (converting a diesel Rabbit to electric) and would like to have one now (but nothing small enough for me is yet available in Guatemala). But, was at least the electric vehicle part of Biden’s Inflation Reduction Act the right thing at the right time?

My opinion is no. As I remember, Elon Musk was asked about this before the IRA was passed and he said that it was not necessary for Tesla. What it was and still is is an artificial way to manipulate demand. To me, any time you artificially manipulate anything you just make a different problem.

Today the majority of EVs sold in the US are made by Tesla which seems like a good thing. But, would that have been different without the IRA? I think not. I think less EVs would have been sold but I feel the trend would have still been there. The main difference is that other vehicle manufacturers would have had more time to get up to speed on producing EVs. The technology would have matured before everyone was pressed into EV production. For example, the advantages of Lithium Iron Phosphate (LFP) batteries would have become obvious.

As I talked about in Trucking Transition to Electric industry would have realized the real advantages of electric trucks. Electric motorcycles and scooters could have evolved into a mainstream choice for local travel. Charging infrastructure could have evolved organically along with renewable energy support for the electric grid.

What’s most important is that without artificial incentives we could have avoided the severe polarization that is happening in the US and around the world. If electric vehicles are really the best choice (which I think they are) then talking to your neighbor about his experiences with his new EV rather than talking about government pressure to convert to an EV would be a better thing.

I am reminded of a conversation I had in a Shell station in Olympia Washington in the early 1980s. At the time I had a VW Rabbit diesel car and was filling it up. At the next pump was a guy filling up his diesel Chevrolet pickup. He started telling me how diesel just didn’t work in anything smaller than a commercial truck. He talked about how many times he had issues with clogged injectors and other problems with a “small” diesel engine. I told him I was surprised because I had had no such problems with my “tiny” diesel engine. I doubt he sold his truck and bought a VW but I feel I gave him something to think about.

Bottom line is that I am pro-EV but also pro-natural transition. We’ll transition but we can do it without the pro/anti-EV war.

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