<div class="css-13gy2f5 e1prll3w0"><p class="article__body-text article__body-text--dropcap"><span>&#x201C;W</span><small>e&#x2019;re coming</small> to Norway,&#x201D; begins an advertisement for General Motors, an American carmaker. Supposedly enraged by the Nordic nation easily surpassing America in electric vehicles (<small>ev</small>s) per person, Will Ferrell, a comedian, sets off over land and sea to deliver the challenge to Norwegians, only to be told, after several mishaps along the way, that he has in fact arrived in Sweden. </p><div class="css-m3y5rp e1lug06p0"><figure><div><figcaption>Listen to this story.</figcaption> <span class="css-1fs0t47 emsvzne0">Enjoy more audio and podcasts on <a id="audio-ios-cta" href="https://economist-app.onelink.me/d2eC/bed1b25">iOS</a> or <a id="audio-android-cta" href="https://economist-app.onelink.me/d2eC/7f3c199">Android</a>.</span></div><audio class="react-audio-player " id="audio-player" src="https://www.economist.com/media-assets/audio/068%20Finance%20and%20economics%20-%20The%20green%20transition-398a3ef8579e5b9164dff1cd5105516c.mp3"><p>Your browser does not support the &lt;audio&gt; element.</p></audio><div class="css-1h1me4y e1lug06p1"><div class="css-vu6x35 e5tfikp0"><div class="css-3mm15k e5tfikp1"><div class="css-jhessp e5tfikp3"><div class="css-1v3o57w e5tfikp7"><span>Save time by listening to our audio articles as you multitask</span></div></div></div></div></div></figure></div><p class="article__body-text">American <small>ev</small> policy is similarly lost. As part of President Joe Biden&#x2019;s bid to decarbonise the economy, the Inflation Reduction Act (<small>ira</small>), a recently passed infrastructure bill, offers incentives for people to purchase <small>ev</small>s. It comes just when other rich countries, including Britain and Germany, are about to reduce theirs, having reconsidered how best to encourage people to use green transport. The evidence suggests they are right to do so&#x2014;and that Mr Biden is heading down the wrong road.</p><p class="article__body-text">America&#x2019;s first problem is protectionism. The <small>ira</small> offers subsidies to <small>ev </small>buyers, including rebates of up to $7,500 for new cars and $4,000 for used ones. For a new car to qualify, though, it must meet strict requirements. Half of the components in its battery must come from America, Canada or Mexico; by 2030, all of them will have to. At present, China controls most of the <a href="/business/2022/08/14/could-the-ev-boom-run-out-of-juice-before-it-really-gets-going">supply chain</a>.</p><p class="article__body-text">As well as irritating America&#x2019;s friends&#x2014;the <small>eu</small> and South Korea have indicated they may challenge these restrictions at the World Trade Organisation&#x2014;such protectionism runs counter to the bill&#x2019;s green goals. The Congressional Budget Office, which assesses the tax-and-spending implications of legislation, estimates a total outlay over the next five years of $1.8bn, or 237,000 <small>ev</small>s if all get the full subsidy&#x2014;a paltry proportion of the 15m cars that were sold in America in 2021.</p><p class="article__body-text">Although prices are falling, <small>ev</small>s are still dearer than vehicles with internal-combustion engines. That is true even after running costs are included. According to researchers at the Dallas branch of the Federal Reserve, at the start of 2021 the median cost per mile of range was $214 for an <small>ev</small>, compared with $104 for a regular car.</p><p class="article__body-text">Encouraging <small>ev</small> purchases does not necessarily take older vehicles off the road, points out David Rapson of the University of California, Davis. Families may, for instance, buy a subsidised <small>ev</small> to complement another vehicle. Norway does not use subsidies; instead, it gives<small> ev </small>owners an exemption from the heavy taxes the country levies on internal-combustion cars. As a bonus, such taxes encourage drivers to spend less on petrol and shy away from thirstier vehicles when buying a new car.</p><p class="article__body-text">Retail-price subsidies also come with a high &#x201C;deadweight&#x201D; loss as many <small>ev</small> purchasers would have bought the car even without the discount. That is why countries with a higher proportion of <small>ev</small> sales than America are starting to bring their subsidy schemes to an end. Germany will start winding down its scheme from next year, before ending it altogether in 2024; Britain abolished many of its bungs earlier this year and plans to use the money to build charging infrastructure instead. </p><p class="article__body-text">Research from the World Bank suggests that Britain&#x2019;s move is sensible. It calculates that on average $10,000 or so is required to encourage the purchase of an electric car. The same result could be achieved by just under $1,600 of spending on charging infrastructure. The most cost-effective means of promoting electric cars, however, come with a near-zero cost: China awards the country&#x2019;s <small>ev</small> owners special &#x201C;green&#x201D; licence plates, allowing local governments to offer privileged access to parking or exemptions from congestion charges. America may want to keep foreign batteries out, but it could still welcome other countries&#x2019; ideas. <span>&#x25A0;</span></p><p class="article__body-text"><i>For more expert analysis of the biggest stories in economics, business and markets, <a href="/moneytalks/&amp;amp;source=gmail&amp;amp;ust=1628284234418000&amp;amp;usg=AFQjCNGviR-zkpwefPKZAIJbeHx5M_SGCQ%22%20data-analytics=">sign up to Money Talks</a>, our weekly newsletter. And for more coverage of climate change, register for <a href="/newsletters">The Climate Issue</a>, our fortnightly newsletter, or visit our <a href="/climate-change">climate-change hub</a>.</i></p></div>

Darkread

How to encourage electric-car use