4.7 Article

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

Journal

ENVIRONMENTAL RESEARCH LETTERS
Volume 17, Issue 8, Pages -

Publisher

IOP Publishing Ltd
DOI: 10.1088/1748-9326/ac7df3

Keywords

electric vehicles; subsidies; consumer preferences; conjoint analysis; discrete choice

Funding

  1. Energy and Environment program at the Alfred P. Sloan Foundation

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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.
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.

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