Rebates, Not Tax Incentives the Better ‘Fuel’ for Electric Vehicle Adoption

July 9, 2022 by Dan McCue
Rebates, Not Tax Incentives the Better ‘Fuel’ for Electric Vehicle Adoption
(Photo by dcbel via UnSplash)

WASHINGTON — A new study from George Washington University suggests that while tax incentives have played an important role in encouraging consumers to buy electric vehicles, direct rebates would be far more effective in getting the widest range of drivers to switch to EVs.

The study, “Not all subsidies are equal: Measuring preferences for electric vehicle financial incentives,” was published in Environmental Research Letters, a quarterly, peer-reviewed scientific journal.

The findings were then distributed by Science Daily, a website that aggregates press releases and publishes them in lightly edited versions.

In it, co-authors Laura Roberson and John Paul Helveston say their research has shown that the current federal incentive — a tax credit — is actually valued the least by car buyers.

The study also found that while 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.

“The current federal electric vehicle tax scheme is a pain,” said Helveston, an assistant professor of engineering management and systems engineering at the university.

“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,” he said. “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,” he said.

As things work now, consumers can receive as much as $7,500 in tax credits from the federal government for purchasing an electric vehicle.

However, as Helveston said, the current tax break regime 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.

Before arriving at their conclusions, Roberson and Helveston  conducted a national survey among general public car buyers to quantify how much car buyers valued different types of incentives, such as a tax credit, a tax deduction, a sales tax exemption and an immediate rebate. 

They found that car buyers overwhelmingly preferred an immediate rebate provided at the point of sale. For the same subsidy amount, buyers valued the rebate by $1,450 more than a tax credit, and this preference was nearly double for lower-income households, used vehicle buyers and buyers with lower budgets.

The researchers also found that changing the perceived value of an incentive affects how much money the federal government can offer for the incentive to still be effective.

“If you gave the incentive to car buyers as cash on the hood, our study found that you could lower the subsidy by almost $1,500. That’s how much people value immediacy,” said Roberson, an engineering management and systems engineering Ph.D. student at GW and lead author of the study. 

“So $7,500 in April when I file taxes is the same to me as $6,000 if you gave me that money at the point of sale. That’s a huge difference in valuation,” she said.

The researchers estimate that, on average, the federal government could have saved $2 billion, or $1,440 per electric vehicle sold, if the federal subsidy available between 2011 and 2019 had been delivered as an immediate rebate instead of a tax credit.

Dan can be reached at [email protected] and @DanMcCue

A+
a-
  • auto sales
  • electric vehicles
  • Research
  • tax credits
  • In The News

    Health

    Voting

    Research

    March 27, 2024
    by Dan McCue
    One-Time Treatment Could Revitalize Immune Systems in the Elderly

    PALO ALTO, Calif. — A new study suggests that a one-time treatment that modulates the composition of a type of... Read More

    PALO ALTO, Calif. — A new study suggests that a one-time treatment that modulates the composition of a type of immune cell could potentially revitalize the immune systems of the elderly, helping their bodies better react to viral and bacterial threats. The research was carried out... Read More

    March 13, 2024
    by Dan McCue
    Researchers Identify Brain Connections Associated with ADHD

    WASHINGTON — After examining more than 8,000 functional brain images of young people with ADHD, researchers have discovered their systems... Read More

    WASHINGTON — After examining more than 8,000 functional brain images of young people with ADHD, researchers have discovered their systems are tied to atypical interactions between the brain’s frontal cortex and the information processing centers deep inside the brain. The research into attention-deficit/hyperactivity disorder was conducted... Read More

    March 1, 2024
    by Dan McCue
    Solar Imports Surged in 2023, Tariff Waiver Set to Expire

    WASHINGTON — The United States saw an “unprecedented wave” of solar panels being imported from Southeast Asia last year, according... Read More

    WASHINGTON — The United States saw an “unprecedented wave” of solar panels being imported from Southeast Asia last year, according to a new analysis by S&P Global, the financial information and analytics firm.  Relying on data reported to the U.S. Census Bureau, S&P Global’s Market Intelligence... Read More

    February 14, 2024
    by Dan McCue
    COVID Vax, Booster During Pregnancy Bolsters Protections for Newborns

    WASHINGTON — Women who receive an mRNA-based COVID-19 vaccination or booster during pregnancy can provide their infants with significant protection... Read More

    WASHINGTON — Women who receive an mRNA-based COVID-19 vaccination or booster during pregnancy can provide their infants with significant protection against COVID-19 for at least six months after birth, a new study found. The research was conducted by the Infectious Diseases Clinical Research Consortium and published... Read More

    February 12, 2024
    by Dan McCue
    Scientists Set Record for Fusion-Generated Energy

    OXFORDSHIRE, U.K. — Researchers at a joint European testing facility set a record for the amount of energy generated from... Read More

    OXFORDSHIRE, U.K. — Researchers at a joint European testing facility set a record for the amount of energy generated from the process of nuclear fusion, but experts say machines capable of safely supplying that energy to the grid are still decades away. The breakthrough, announced on... Read More

    First US Lunar Lander in Over 50 Years Launched but Problem Develops on Way to Moon

    CAPE CANAVERAL, Fla. (AP) — The first U.S. lunar lander in more than 50 years rocketed to space Monday, launching... Read More

    CAPE CANAVERAL, Fla. (AP) — The first U.S. lunar lander in more than 50 years rocketed to space Monday, launching a race for private companies to deliver experiments and other items to the moon. But about seven hours after liftoff, Astrobotic Technology reported the solar panel... Read More

    News From The Well
    scroll top