Is Electric Vehicle the New Black for Global Economics?
In another edition of understanding economic impacts of climate change, electric vehicles seemed the perfect option. Most economies have been debating on the switch to electric vehicles and its efficiency. While there are doubts about the environmental benefits the same, the economic impact is less spoken about.
Without a doubt, the adoption of electric vehicles will lead to greater employment due to fuel savings. Dr. David Roland-Holst, an economist at the University of California, Berkeley, analyzed the economic and job creation impact of two EV market penetration scenarios for California. This analysis found that, if EVs comprise 15.4 percent of new vehicle sales by 2030, then nearly 50,000 additional jobs would be created in California. Moreover, the economic impact has been analysed by countries like Australia and Hawaii as well as institutions through a CGE model. Since various factors like subsidies, price reductions and government policies will affect the price, a holistic analysis is imperative. According to environmental researchers, subsidies of EVs are highly beneficial for the economic growth and further adoption of EVs. Subsidies have significantly more leverage on GDP and EV adoption than changes in fuel price, and by maintaining capital flows into the manufacturing sector, potential GDP losses due to non-subsidized price drops are avoided and the industry's transition to greener products is supported. A combination of subsidies with rising productivity and fuel price trends can further amplify the positive effect of the subsidies.
However, this is not even scratching the surface of the debate of how electric vehicles will impact global economies. With climate change occurring every minute around us, this discussion will grow and impact our lives every moment. Electric vehicles are considered to have the potential to drive our future, therefore, it is of paramount importance to educate one about it.