Advancements in technology have drastically changed the automotive industry in the 21st century. According to the Center of Automotive Research, the automotive industry contributed 3.5% to the real US GDP and employs over 1.7 million workers (Hill, Cooper, and Menk 2017). The recent rise in electric car production has led to an increase in disposable income as well as the employment rate, leading to an improved GDP.
A study done by the Southwest Energy Efficiency Project found that drivers can save up to $1300 annually on gas, which will result in significantly greater disposable income for many citizens (Salisbury 2014). With more money in circulation, customers are more likely to spend more, resulting in the funds available for the production and research of electric cars to increase. Joshua Rosenbloom, an economics professor at Iowa State University, stated that “the effects in the short run of electric car manufacturing will be small…but it will boost production of capital to build cars.” This means that in the long run, there will be more funding available causing the GDP to rise.
An increase in electric car production has also impacted the US employment rate. According to the International Organization of Motor Vehicle Manufacturers, it would require 9 million employees to construct 60 million electric vehicles to assemble the vehicles and build the individual parts as electric vehicles require more advanced components (International Organization of Motor Vehicle Manufacturers). The increased employment would boost spending as there would be a greater number of people who are willing to buy available goods. Professor Cees Van Beers at the University of Leiden, however, explained how the opposite may be true: “Electric cars are on average more expensive than non-electric vehicles and therefore [only] people with higher incomes can better afford [them].” If only wealthy consumers are able to afford electric cars, spending in the market will actually decrease. Research from BloombergNEF hopes the manufacturing cost of electric vehicles reduces, making them an accessible product for everyone.
The time and money that has been invested in the electric vehicle industry has allowed US citizens to have more disposable income and will continue to do so as the funds for the industry grow, increasing the GDP as well. Additionally, the employment boost initiated by the manufacturing of electric vehicles will continue to rise, having a similar effect on the US economic growth. Overall, both positively impacting the overall economy.