NEW YORK (TheStreet) -- The purpose of this article is to show with relatively simple logic that electric cars will not have a noticeable impact on air quality and so it is a complete waste of money to subsidize these cars.
Let's start with the objective of not only electrification but also of other alternative fuels: reduce emissions, so as to improve the air quality.
That's a laudable objective. There was a time, some 40 years ago, when the air quality in much of America's major cities was bad. The smog over Los Angeles was legendary.
So what happened over the last 40 years? The emissions standards for regular gasoline and diesel cars were changed dramatically, step by step, as technology allowed.
Over these 40 years, as the half-life of the car fleet turned over every decade, on average, essentially 100% of this bad air and smog went away. No, it did not decline 100% but a new 2014 car sold today has seen a reduction in emissions by almost 100% compared to the average new car of 40 years ago.
These days you could lock yourself in a small garage, turn on the engine and you would be fine for a very long time. You would die from dehydration or starvation before the engine's emissions killed you.
If a new 2014 car sold in the U.S. or Western Europe today is so clean, what is the remaining problem? Why are emissions not down 100% on an aggregate basis?
The answer is mostly twofold:
1. The average age of the car fleet is 11.4 years. This means the average car on the road today was made in early 2003. That car from 2003 still pollutes more than a 2014 car.
2. Some vehicles are not subject to the same emissions standards. You will likely notice this when a large truck or bus passes you by. They spew out massive amounts of (mostly) diesel emissions.
Let's say that we do nothing in terms of alternative fuels and tightening automobile emissions standards going forward -- what would happen? If we do nothing, the car fleet would become cleaner and cleaner every single year, as the car park rolls over. Within a dozen years, most cars would be as clean as the best new cars today.
What would remain is the issue of trucks and buses, and that is a separate track that could see a similar fix: Just keep tightening the standards from year to year.
Remember this: We are starting from a place today where the air is as good as it has been in a century. Essentially every single American today who opens the window or walks out the door is not suffering from an automobile emissions problem. This is obviously very different in many other countries.
With that in mind, it's comforting to know that if we here in the U.S. did nothing except for buying new cars every year to replace the old ones, the tiny remaining automobile emissions would be gone within approximately a decade.
So what could accelerate this improvement to stamp out the last 1% of automobile emissions? It's pretty simple, actually: We need to make new cars so cheap that the old ones -- the ones that pollute -- are replaced as quickly as possible. How do you do that? You focus on making the cheapest cars in the market, making them cheaper than they are today.
One way to make them cheaper is to not tax them as much. Let's say that the cheapest new cars on the market, such as the $14,000 Nissan (NSANY) Versa, would be sold tax-free,and have cheaper annual road taxes. Then you would maximize the rate at which the oldest clunkers would be replaced by those who could otherwise least afford to buy a new car.
Another way to make them cheaper would be to reduce all of the safety legislation that adds cost to manufacturing a new car. Well-meaning as it may be, to the extent that this additional equipment raises the price of a new car to the point where the driver keeps that old 20- to 40-year-old clunker, the result is this person ends up driving around in less-safe car that pollutes dramatically more than the new car would.
In contrast, today's policy of subsidizing $30,000-$130,000 mostly electric cars does almost nothing for the air quality. The people who can afford these cars probably weren't driving 20- to 40-year-old cars to begin with, and would have bought some other $30,000-$130,000 car anyway. In other words, no problem is being solved by subsidizing these buyers of high-end electric cars.
From an air quality perspective, when you subsidize someone to buy a plug-in electric Mercedes B-Class instead of a Mercedes C300, you have gained next to nothing. It's like arguing whether Cindy Crawford or Linda Evangelista is the more beautiful model. You are already in the 99.9999% territory, so squeezing out that last 0.0001% of emissions is not going to improve the air quality.
On the other hand, if the price of a brand-new Nissan Versa is reduced from $14,000 to $12,000, you have enabled millions of lower-income Americans to replace that 1974 Volvo, massively reducing emissions that impact upon air quality. That's how you fix the final decimal point of automobile emissions.
I am not saying that an electric car emits more pollutants than even the best gasoline/diesel car. The preponderance of the evidence suggests that on a lifecycle basis, the electric car emits less. However, a sense of perspective is necessary: A regular new gasoline/diesel car sold today in 2014 already has almost zero emissions compared to a car that is a 10-40 years old.
In other words, we are already deep into the 99%. We are arguing whether Shaq or Kareem Abdul-Jabbar was the best basketball player. One of them probably was, but does it matter? You don't improve public health by subsidizing one of those two already superb athletes. You improve public health by having the large masses of people exercise more and eat healthier foods.
This is not to say that electric cars don't have benefits and that there aren't good reasons to buy them. There are.
For starters, electric cars drive better in city/suburban traffic. They are smoother, providing linear power and have instant torque. This is a premium experience.
Electrics are also solving a very different kind of pollution: noise! Imagine city streets being a lot more quiet. That's a tangible benefit.
Plugging in the car at home overnight, as well as at the office during the day, is also a convenient solution for many people, especially those who live in single-family homes with garages and whose employers have invested in electric car charging infrastructure.
The good reasons to buy an electric car, however, are very different from the one being used to justify government subsidies and other forms of red tape favoring their production and consumption. Compared to allowing the cumulative car fleet to refresh with the regular new gasoline cars, electrification will make essentially zero difference.
As such, they should not be subsidized.
At the time of publication, the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.