Utah Foundation releases Driving Toward a Cleaner Future: Alternative Fuel Vehicles in Utah. The report examines the incentives and disincentives around electric cars, as well as the policy decisions around preparation for a wide proliferation of electric vehicles in the future. It also examines the incentives and requirements around public and private heavy-duty fleet vehicles.
Key findings of the study include:
- Electric vehicles – or battery electric cars and plug-in hybrids – accounted for less than 2% of the nation’s new vehicle market share in 2018. In Utah, electric’s market share was about 1.6%.
- Addressing the fears of consumers is a core challenge in alternative fuel vehicle adoption. Less than a quarter of Americans consider purchasing electric cars because of concerns about running out of power, the availability of charging stations and initial vehicle cost.
- In looking at Norway and the top-tier states for market share, it appears that electric vehicle incentives work when offered at a robust level. Changing market preferences appear to be a much stronger force than smaller incentives.
- Utah’s relatively small electric vehicle tax credit was not renewed in 2016, yet electric vehicle market share has continued to increase.
- The top electric-vehicle-adopting states – all in the West – offer significant incentives. However, the 10 states with the highest market share growth in 2018 offer no incentives (though they all had 2017 market share under one percent).
- There is evidence that the looming threat of expiring tax credits can encourage short-term market uptake of alternative fuel vehicles.
- Electric vehicles are expected to cost the same as their internal combustion counterparts by the mid-2020s.
- Due to state and local investment, as well as the Volkswagen Settlement and private actors, Utah’s electric vehicle charging infrastructure is poised to quickly expand.
- Large fleet vehicles account for one-third to one-half of Utah’s vehicle emissions, even though they account for only 3% of the vehicle miles traveled.
- Alternative-fuel, heavy-duty fleet vehicles are more expensive than diesel and have large infrastructure costs, but offer large fuel and maintenance savings.
- In the long run, market forces will propel consumer uptake of electric passenger vehicles. If Utah were to use tax credits to encourage a more immediate market embrace, it would have to make an investment in sizable credits. However, it might consider doing so on a short-term basis to limit the fiscal impacts and discourage fence-sitting.
- To encourage the market’s embrace of alternative fuel vehicles, state and local governments should continue to explore opportunities to encourage private actors to deploy alternative fuel infrastructure for customers, tenants, employees and visitors.
- Cities and counties have at least two potential roles to play: adopting building codes that are “future-proof” for the growth in alternative fuel vehicles, and retiring older public-service diesel fuel fleets.
- Utah may get a substantial air quality return on its tax credit investments by continuing to focus incentives on heavy-duty fleet vehicles and renewing them in 2020.
- Due to the urgency of cleaning up Utah’s air, replacing older diesel trucks with so-called “clean diesel” offers a potential target for more modest tax incentives.
- To encourage the market’s embrace of alternative fuel vehicles, public and private sector stakeholders should mount public information campaigns to explain the growing availability of alternative fuel infrastructure and address other consumer fears.
Utah Foundation President Peter Reichard said that with changing consumer preferences, increased electric vehicle charging capacity, greater affordability and new infrastructure, the market is shifting toward alternative fuel vehicles. But in the meantime, population growth and the presence of older vehicles, particularly heavy-duty vehicles, pose real challenges.
“Utah Foundation’s surveys show that air quality is consistently a top concern among Utahns, suggesting that we ought to be assertive in encouraging a shift to clean alternative fuel vehicles,” Reichard said. “While our analysis makes clear that large tax incentives work, they’re costly. So maintaining an emphasis on infrastructure and the worst-polluting vehicles is critical to a cost-effective approach.”
The study Driving Toward a Cleaner Future: Alternative Fuel Vehicles in Utah is available on the Utah Foundation website at www.utahfoundation.org. Thanks to UCAIR for providing grant support.