Proposed D.C. E-Bike Subsidy Packs an Economic Punch, Analysis Finds

A proposed rebate on electric bikes in the District would be more cost-effective in reducing gasoline miles driven than electric car subsidies thanks to the higher elasticity of e-bike demand.

2 minute read

January 31, 2023, 6:00 AM PST

By Diana Ionescu @aworkoffiction

Young bearded man with helmet setting up battery on back of electric bike

Ground Picture / Electric bike

According to an article by David Edmondson in Greater Greater Washington, a proposed $400 to $1,200 e-bike subsidy in Washington, D.C. “packs the most pollution-fighting power” compared to other plans to promote the adoption of zero-emission transportation, bringing the biggest return on investment for reducing gasoline miles driven. 

As Edmondson explains, this has to do with the economic concept of elasticity. “[Zero-emission vehicles] are a lot more expensive than e-bikes and, therefore, it takes a lot of money to meaningfully lower the cost of a ZEV compared to an e-bike.” Edmondson used a Canadian model to predict e-bike sales under the new subsidy, predicting a rise of 15 percent in annual sales. “Remarkably, 44% of those sales would go to incentivized buyers who would not have otherwise purchased an e-bike,” Edmondson notes. Most electric car subsidies, on the other hand, tend to be used by people who would already buy electric or hybrid cars. 

While they can’t replace all vehicle trips, e-bikes can have a significant impact on gasoline miles. “When a household buys an e-bike, their driving (as measured by vehicle miles traveled, or VMT) decreases by more than a third,” Edmondson found. “When that is taken into consideration, an e-bike subsidy is 2.9 times more effective per dollar at displacing gasoline miles than a ZEV subsidy.”

Edmondson points out the added benefits of e-bikes, such as better health, easier charging, requiring fewer resources for batteries and putting less strain on city streets, and reduced safety risks for pedestrians and other road users.

Wednesday, January 25, 2023 in Greater Greater Washington

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