Letter From America: Infrastructure Over Subsidies for Cycling Boost

Santa Fe, US

Letter From America is a monthly feature in our other publication, The Latz Report. It focuses on the issues within the US bike industry this month covered a topic very close to the heart of micromobility, and likely to inspire debate, so we thought we would include this instalment in the Micromobility Report as well.

There’s been much wailing and gnashing of teeth of late among e-bike advocates who’ve long hoped the federal government would loosen its purse strings and subsidise the purchase of new e-bikes. And it almost came to be.

But a bold plan to offer a 30% tax credit toward the purchase of an e-bike died a quick death when West Virginia senator Joe Manchin, whose vote was critical to pass the Inflation Reduction Act (IRS), pencilled it out of the bill. Poverty-plagued West Virginia is the fourth poorest state in the Union and would have little political appetite for rebates on expensive electric bicycles.

The original bill would have provided a tax credit of around $1,500, depending upon specific income levels, for an e-bike sold at retail for up to $4,000. It doesn’t take an IQ of 150 to surmise that delivering a tax credit for high-priced e-bikes is a political non-starter. Even for me!

Let me take that critique one step further. Subsidising e-bike sales at almost any level makes little sense. And I can hear the howls of indignation rising, since to say such a thing borders on heresy.

The issue of subsidies has been complicated by the industry’s faux concern that the poor and people of color would benefit from e-bike subsidies; that the poor would embrace e-bikes and commute to work or wherever, offering them a better toe-hold in the US economy. That canard is mostly nonsense in the US, with no empirical findings to back it up. At least none that I could find.

On its face, though, it ‘sounds’ true enough – that those low-income workers who’ve been pedaling a conventional bike to and from late night shifts would most likely find an e-bike a welcome addition. On the other hand, I’m certain some low-income workers have bought sub-$1,000 e-bikes, or found used e-bikes, to make that commute. And they did it without subsidies.

I have, however, searched high and low for any evidence that low-income earners are clamouring for e-bikes. (And if it’s out there, I’m sure someone will let me know ASAP) Instead, they’re clamouring for more efficient rail and bus transportation across cities like Los Angeles, New York, Chicago and elsewhere. There’s ample evidence of that. And good public transportation sharply cuts overall CO2 emissions.

There was an amusing experiment, if you want to call it that, done in Denver over a three-month period during the pandemic. It tracked 13 low-income ‘essential workers’ who were given e-bikes. The conclusion? Personal ownership was a powerful motivator in using them.

And with that, among other considerations, Denver launched an e-bike rebate program paid for by Denver’s Climate Protection Fund. At the moment, it’s a $10 million commitment. Similar small-number studies have been done in Europe. Give someone an e-bike and, yes, they cut back on driving. (See https://par.nsf.gov/servlets/purl/10218774.) The word ‘give’ is the qualifier.

Besides, as with so many subsidies and tax incentives, it’s generally higher-income earners who benefit the most. It’s called disposable income, of which low-income earners have less. Often, much less. And that, from my perspective, holds true for most e-bike subsidy plans I’ve seen.

Cameron Bennett and John MacArthur at Portland (Oregon) State University’s Transportation Research and Education Center offers the best data currently available on various subsidy programs in Canada and the US. (See https://trec.pdx.edu/e-bike-research).

Given the combined size of the two nations, 82 vetted programs is less than a pimple on the landscape. Furthermore, incentives, subsidies and requirements to participate in these programs are all over the map.

In my view, this is a hit-or-miss way to move the needle toward a cleaner environment. It’s a lot of money, a fair amount of bureaucracy and limited results.

It’s fair to say that PeopleForBikes, the US industry’s premier advocacy organisation, had it right from the beginning – ‘build it and they would come’. Cycling infrastructure is the key to putting more people on bikes more often, and a tip of the quill to Trek’s John Burke who led that charge.

Yet too many bike paths in the US fail to link up and, in too many cases, fail to deliver commuters either to work, to shopping or even to paths and trails set aside for recreation. The Wall Street Journal recently documented the disconnect.

So what to do? Here are my thoughts:

Legislators who worry about city air pollution, citizen health and climate change need to understand how Europe has financed and managed a vast network of bike paths—and the EU continues to invest. Those investments take not just hundreds but thousands of people out of their cars and puts them on bikes every day.

The industry should get out of the subsidy business. It can distort local and regional markets, particularly at retail. Worse, major suppliers can more easily get behind these programs and ultimately increase their market share to the disadvantage of smaller suppliers.

Subsidy programs are often complicated. Check out Denver’s to fully grasp the hoops a consumer, rich or poor, must jump through to qualify.

Focus on infrastructure instead. This is the gift that keeps on giving every day. The industry, as many have pointed out, has limited resources when lobbying to tap the public till for cycling-oriented programs. Begging for federal subsidies to sell e-bikes is a non-starter. But building infrastructure, maintaining and improving them has a measurable impact, especially as they serve low-income communities.

Finally, the industry must focus on that final mile from bus stops, railway stations or other points of access. Spend some of those lobbying dollars helping mass transportation improve across the board — federal, State and local levels. Good mass transportation has more impact on the quality of life for people of all income levels than any hodge-podge grouping of subsidy programs.

So focus on infrastructure, make the building trades an ally, and don’t get bogged down in penny-ante subsidy programs.