SMM12, March 27: earlier this month, the Trump administration threatened to end the federal tax credit for electric car (EV). Soon after, Congress decided not to expand the federal tax credit for electric vehicles, which was bad for carmakers and potential buyers of electric cars. But while this has disappointed many, it is important to understand how government subsidies have unintended consequences for the markets in which they issue.

But decades later, diesel proved unenvironmentally friendly, and Europe was forced to ban diesel vehicles because they were the main cause of air pollution and haze. But despite some mistakes in the government's judgment on diesel, Europe, China and other countries are replacing gasoline-powered vehicles with greener alternatives to electric vehicles.

Almost all major global carmakers plan to convert all their models into some form of battery-powered cars, but these risks and ambitious investments are assuming that future developments can overcome the current financial weaknesses of electric vehicles.

Battery costs have raised the price of electric vehicles to much higher levels than the equivalent internal combustion engine (ICE), a premium that has not been offset by the cost of eliminating gasoline. As a result, governments are trying to offset the adverse economy of electric vehicles by using various cash incentives and other subsidies to promote the purchase of electric vehicles in order to achieve a "greener future".

The Norwegian government has been very successful in raising the level of electric vehicles on roads by providing incentives that, ironically, have been supported by economies rich as a result of crude oil production. Norwegian electric car drivers can use bus lanes, discounted parking and tolls, and waive various taxes and fees related to vehicles. But when the unintended consequences surfaced, Norway abandoned some incentives. For example, when three of the four buses in the bus lane are electric cars, congestion means that buses in Oslo cannot be completed on time, while "green" public transport users are very inconvenient.

In another example, the Netherlands has a tax credit of 19000 euros per car, and the loss of gasoline tax revenue is another accidental consequence of electric vehicles. Forcing states (and even California, the leader of electric vehicles) to impose fees on electric cars and hybrid owners to make up for tax losses.

Many believe that the financing burden for key road projects largely funded by gasoline taxes cannot fall on the population with the oldest and most fuel-efficient vehicles. With the surge in electric vehicles, government-mandated costs are increasing in number and frequency, but it is not clear whether these costs are enough to offset the loss of gasoline tax revenue.

There are also many unresolved problems, as well as potential unintended consequences, that affect the economy of life ownership of electric vehicles and the social burden of adapting to this shift.

Who will build and invest in charging infrastructure, including multi-family buildings, in our cities and homes? What is the impact of millions of cars on grid charging at the same time, especially the life of transformers (after all, there are 2.751 million cars on roads in the United States today, of which only 800000 are electric)? Since battery life is no more than ten years (with a significant downgrade from five years) how will car owners adapt to the shorter life of electric vehicles? Battery replacement may cost as much as the current value of the car itself.

Despite all the economic problems associated with electric vehicles, the most surprising and unintended consequence may be pollution.

Even in the United States, most of the electricity in electric cars is generated by "dirty energy," which means that supplying power to electric vehicles in many markets can lead to more air pollution.

As Herbert Dees, Volkswagen's chief executive, explains, "renewable energy is necessary." If you don't have renewable energy or at least a low-carbon share of energy, then you're replacing oil with coal, and it doesn't make sense. "there are other problems due to improper end treatment-life batteries. Less than 10% of former electric car batteries are recycled because it makes no economic sense to do so.

With Europe banning its once-popular diesel engines, many countries around the world are convinced that electric vehicles are the answer, and the same may be true if accelerated research on electric vehicles solves many of the problems around them.

But before that, the government and the electric car industry must first overcome the obstacles they have failed to address; if not, there will be more unintended consequences.

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