CARB launches $25M pilot program to help small trucking fleets transition to zero-emission technologies
POSCO acquires silicon anode startup Tera Technos

Study finds EV buyers want rebates, not tax credits; government could have saved $2B

A study by a team from the George Washington University finds that not all financial incentives are created equal in the eyes of prospective car buyers, and the current federal incentive—a tax credit—is, in fact, valued the least by car buyers. The study also found that whereas time-delayed incentives like federal tax credits favor wealthier buyers, immediate incentives like direct rebates were strongly preferred by used car buyers and buyers with lower incomes.

An open-access paper on the study is published in the journal Environmental Research Letters.

The current federal electric vehicle tax scheme is a pain. First of all, you have to have money. You have to be wealthy enough to buy the whole car and then wait for your tax-break kickback in April. But if you’re not in that class of buyers, you often need the money when you buy the car or you’re not going to buy it. Our study shows that an immediate rebate at the point of sale would be more equitable and potentially more effective in broadening the buying market for electric vehicles.

—John Helveston, an assistant professor of engineering management and systems engineering at GW and co-author on the study

Currently, consumers can receive as much as $7,500 in tax credits from the federal government for purchasing an electric vehicle, though it requires that buyers pay the full vehicle price and then wait to receive the credit when filing their taxes. The researchers found that changing how the incentive is given to a potential buyer changes how much they value it.

Using a national conjoint survey (N = 2,170 respondents), we quantify how US vehicle buyers value different features of PEV financial incentives. Participants overwhelmingly prefer immediate rebates, on average valuing them by $580, $1,450, and $2,630 more than sales tax exemptions, tax credits, or tax deductions, respectively. These effects are significantly larger for lower-income households, used vehicle buyers, and buyers with lower budgets.

We estimate that on average $2 billion could have been saved if the federal subsidy available between 2011 and 2019 were delivered as an immediate rebate instead of a tax credit, or $1,440 per PEV sold. Our results suggest that structuring incentives as immediate rebates would deliver a greater value to customers and would be more equitably distributed compared to the current tax credit scheme.

—Roberson and Helveston (2022)

All the incentive money that we’ve been spending to try to get people to buy electric vehicles, it’s mostly gone to the wealthiest car buyers. It’s not doing a good job of spurring wider adoption of electric vehicles. Our results suggest that structuring incentives as immediate rebates would deliver a greater value to customers, be more equitable, and accelerate electric vehicle purchases in the United States.

—John Helveston


  • Laura A. Roberson et al. (2022) “Not all subsidies are equal: Measuring preferences for electric vehicle financial incentives” Environ. Res. Lett. in press doi: 10.1088/1748-9326/ac7df3


The comments to this entry are closed.