Not all subsidies are equal: measuring preferences for electric vehicle financial incentives

Financial incentives, such as purchase subsidies, have been found to increase plug-in electric vehicle (PEV) adoption, but how these incentives are designed can impact their effectiveness as well as how equitably they are distributed. Using a national conjoint survey (N = 2170 respondents), we quantify how U.S. vehicle buyers value different features of PEV financial incentives. Participants overwhelmingly prefer immediate rebates, on average valuing them by $580, $1450, and $2630 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 $1440 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.

Automated summary

Financial incentives, such as immediate rebates, are preferred by U.S. vehicle buyers for plug-in electric vehicles (PEVs). This preference is particularly strong among lower-income households, used vehicle buyers, and those with lower budgets. Implementing immediate rebates instead of tax credits could have saved $2 billion between 2011 and 2019, with an average saving of $1440 per PEV sold. This study suggests that structuring incentives as immediate rebates would deliver greater value and a fairer distribution compared to the current tax credit scheme.