Does your EV hurt, or help, the economy?

livemint.com:

If you buy an electric vehicle rather than one with a gas engine, will it help the economy? The more common question is whether EVs help the environment. The answer is that they do, in terms of carbon emissions, albeit with wide variation depending on how the electricity that powers it is generated and where its battery materials come from. This has long underpinned government support in many countries, including the U.S.

But a product that helps the environment while posing a risk to the economy will lose public backing as it grows. This already seems to be happening: Some Western governments have scaled back commitments to EVs, fearful that they could aggravate problems such as inflation, job losses in industry and high public debt. Germany, flag-bearer of fiscal conservatism, cut EV subsidies prematurely in December after a court struck down a government financing tool.

In March, the Biden administration softened proposed fuel-economy rules requiring automakers to phase out sales of traditional cars. The European Union is considering additional import duties on Chinese EVs, even though higher costs will slow adoption of a technology it has long promoted. The visibility of EVs makes them something of a lightning rod in the shift from fossil fuels to green energy.

This transition isn’t like previous ones, when cheap coal replaced wood in the 19th century or oil replaced coal in the 20th century as new technologies emerged. This time, public policy is driving the agenda faster than the technologies would otherwise allow, turning an environmental cost into an economic one. The result is what economists call a supply shock.