The Economic Impact Of EVs On Households — Not All Are Equal

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It was interesting that, when the University of Michigan released a study this month about the impact of EVs on overall household income, most media outlets grabbed onto a generic fact within the research write-up. “Most Households Could Cut Energy Cost Burden—” this is the headline that Reuters, MSN, Yahoo, and other major media outlets used.

However, the headline from the University of Michigan research writeup focuses on an entirely different view of the economic impact of EVs, the division of classes that is largely hidden in the US: “EV Transition Will Benefit Most US Vehicle Owners, But Lowest Income Americans Could Get Left Behind.

Finally, the headline published in the original research indicates no findings, but, rather, refers to its theoretical underpinnings: “Mapping Electric Vehicle Impacts: Greenhouse Gas Emissions, Fuel Costs, and Energy Justice in the United States.”  The study was published in the January, 2023 issue of Environmental Research Letters, an IOP Publishing journal.

The distinction among the 3 versions of the headlines cannot be buried.

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US Energy Secretary Jennifer Granholm said recently at CES the Biden administration “is focused totally on bringing down the costs of energy for people” and said vehicle owners are saving $35 on average to recharge an EV versus filling up a traditional gas tank. The Transportation Department calculates that US households spent an average of $10,961 on transportation in 2021. Households in the lowest income quintile spent the least on transportation but faced a larger transportation cost burden, spending 27% of after-tax income on transportation compared to 10.4% by the highest income quintile.

The Impact of EVs on Different Households is Lanes Apart

Yes, 90% of current automobile owners will spend less if they switch to an EV. That makes sense, right? While the upfront costs of EVs — at least until recently — have exceeded the average cost of an internal combustion engine (ICE) vehicle, the cost of ownership over the life of an EV is less. (The original research does not include vehicle purchase costs.)

However, the University of Michigan research is really about how half of the lowest income US households (an estimated 8.3 million households) will continue to experience high transportation energy burdens. These are households that spend more than 4% of household income on filling the tank or charging up.

Why is this nuance important? What does it tell us about gaps in the transition to transportation electrification? Is there any momentum toward establishing more equitable future transportation?

To their credit, the major outlets did include the line “but very high EV transportation energy burdens would continue for the lowest income households, the study found.” The statement occurs a couple of paragraphs in. Why is it déclassé to talk about the importance of making EVs possible for everyone?

Could it be the discussion of “energy justice” at a time when accusations of being “woke” can make or break careers? Take Florida Governor Ron DeSantis. He’s being sued by former Hillsborough State Attorney Andrew Warren for removing him from office for his “woke” pro-choice opinions. When he announced Warren’s suspension, DeSantis referred to him as a “woke ideologue” who “masqueraded” as a prosecutor. (Yesterday, US District Judge Robert L. Hinkle ruled Friday that DeSantis’ suspension of Warren violated the Florida Constitution and the First Amendment.)

Perhaps it’s too controversial for major media outlets to foreground how this is the first study to examine EV energy costs through the lens of distributive justice, done so by calculating the EV energy burden (percentage of income spent on EV charging) for the entire US. Distributive justice concerns the fair distribution of benefits and burdens. It is also the first study to consider the spatial variation of both EV energy costs and greenhouse gas emissions across the country.

“Our analysis indicates that future grid decarbonization, current and future fuel prices, and charging accessibility will impact the extent to which EV benefits will be realized, including lowering transportation energy burdens for low-income households,” said study senior author Greg Keoleian, director of U of M’s Center for Sustainable Systems.

Creating More Equitable Transportation: The Impact of EVs

Let’s deconstruct the factors contributing to low EV savings for some people. Maybe we can investigate cleantech solutions to these difficulties. Addressing this inequity hinges on 3 major interventions, the authors argue.

Targeted policies to promote energy justice in lower income communities, including subsidizing charging infrastructure. Policies suggested by energy justice scholars include incentives for new and used vehicles, particularly those that are not exclusively tied to taxes, programs that specifically target low income households (e.g. California’s Enhanced Fleet Modernization Program), and raising awareness about BEVs (e.g. Drive Electric Vermont). Additionally, increasing access to residential or cheaper public charging is key to addressing distributional justice concerns, particularly for renters, households living in multi-family dwellings, lower income households, and rural households.

Strategies to reduce electricity costs. Regions with moderate to high energy burden savings but low GHG savings potential can pursue grid decarbonization policies, while the focus should be more on electricity prices for regions with the opposite trend. Several areas require both types of policies to increase EV benefits. Pairing rooftop solar and EV incentives, for example, indicates promising gains in reducing carbon intensity and electricity prices for low and moderate income households.

Expanding access to low-carbon transport infrastructure. An opportunity exists for reducing energy burden via investment in other transportation modes such as transit, biking, and walking. Vehicle electrification is unlikely to meet passenger transport mitigation targets alone, and, therefore, demandside solutions, such as densification, mode switching, and behavioral changes, are essential and have the potential to reduce emissions by 20%–50% between 2010 and 2050. Moreover, car infrastructure lock-in and inadequate public transit funding as potential procedural injustices stemming from over-reliance on EV policies to decarbonize passenger transport.

Final Thoughts

The U of M analysis indicates the potential for widespread co-benefits from EV adoption; however, the significant spatial and income-level variation emphasizes the need for regional and localized approaches to address persistent issues of high BEV burden and slow grid decarbonization.

The authors conclude with a reminder that, while their study suggests the significant potential of EVs to reduce GHG emissions and transportation energy burdens, these are just two important considerations within the broad context of an energy justice framework. Though not an exhaustive list, there are other justice concerns related to the EV life cycle that should be discussed, including upstream activities such as mineral extraction and downstream activities such as battery disposal.

impact of EVs
Photo by Carolyn Fortuna / CleanTechnica

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Carolyn Fortuna

Carolyn Fortuna, PhD, is a writer, researcher, and educator with a lifelong dedication to ecojustice. Carolyn has won awards from the Anti-Defamation League, The International Literacy Association, and The Leavey Foundation. Carolyn is a small-time investor in Tesla and an owner of a 2022 Tesla Model Y as well as a 2017 Chevy Bolt. Please follow Carolyn on Substack:

Carolyn Fortuna has 1283 posts and counting. See all posts by Carolyn Fortuna