6 Jun 19

EV credits go to people who were going to buy an EV anyway

According to a study published by the US National Bureau of Economic Research, EV credits miss their mark as they mostly go to people who were going to buy an electric car anyway. What’s more, the vehicle they replace was already more environmentally-friendly than the average.

The study, conducted by researchers from Peking University, Cornell University and the non-profit Resources for the Future, concluded that 70% of the EV tax credits were obtained by households that would have bought an EV without the credits.

The vehicle models that were replaced by EVs most include the Honda Accord, Toyota Prius, Toyota Camry, Honda Civic and the Chevrolet Cruze. The researchers say this pattern suggests that EVs mainly attracted consumers who were originally choosing mid-size and fuel-efficient petrol or hybrid vehicles rather than inefficient SUVs or pick-up trucks.

Until recently, EVs were much more expensive than cars with traditional powertrains, meaning the maximum $7,500 tax credit didn’t balance out the difference. As manufacturers have starting introducing more affordable EV options, this could change in the near future.

However, policy makers should probably ask themselves whether they are spending tax dollars wisely. The researchers have some suggestions: target price-sensitive consumers or those driving fuel-inefficient vehicles.

The report looked at the situation in the United States. It is unclear how efficient tax incentives for EVs are elsewhere.

Authored by: Benjamin Uyttebroeck