Biden Administration's Electric Vehicle Incentive Program Generates Over $1 Billion in Immediate Savings for Consumers

In a significant stride towards advancing clean transportation and reducing consumer costs, the U.S. Department of the Treasury, in collaboration with the IRS, has revealed that consumers have benefited from more than $1 billion in upfront savings on their purchase of over 150,000 electric vehicles (EVs) since the onset of 2024.

This milestone underscores the Biden-Harris Administration's commitment to alleviating transportation expenses for American households.

The savings translate into an average annual reduction of $1,750 in fuel and maintenance expenses, culminating in approximately $21,000 in discounted savings over the typical 15-year lifespan of a vehicle compared to traditional gasoline-powered counterparts. The collective impact of these savings extends to around $262 million annually in reduced fuel and maintenance costs for the existing 150,000 EVs, potentially amounting to up to $3.2 billion throughout the vehicles' lifespans.

Following the enactment of President Biden's Inflation Reduction Act, the clean vehicle industry in the United States has witnessed remarkable growth. In 2023 alone, the nation experienced record-breaking sales of approximately 1.5 million passenger clean vehicles, representing a 50 percent year-over-year surge from 2022.

Today's announcement serves as compelling evidence of the substantial cost benefits that Americans are reaping as a result of these policies.

Secretary of the Treasury, Janet L. Yellen, emphasized the impact of the Inflation Reduction Act in facilitating reduced costs for EV purchases, citing the $1 billion in upfront savings since January as evidence. Yellen highlighted that this initiative not only expands consumer choices but also opens avenues for companies to broaden their customer base.

The Act introduced a mechanism enabling the transfer of clean vehicle credits directly to registered dealers, providing consumers with significant upfront discounts and making these credits accessible at the point of sale rather than during tax filings.

Since its implementation on January 1, 2024, the mechanism has delivered over $1 billion in financial benefits to consumers through the clean vehicle advance payment program, encompassing both new and used EVs. More than 150,000 advance payments have been issued, with the majority involving the transfer of tax credits to dealers, a popular choice among consumers.

A comprehensive analysis conducted by Treasury's Office of Economic Policy, in collaboration with Energy Innovation Policy & Technology, estimates that EV owners stand to save between $18,000 to $24,000 over the 15-year lifespan of their vehicles compared to gasoline-powered alternatives. These savings primarily stem from lower fuel costs, with electricity costs per mile significantly undercutting gasoline expenses. Moreover, EVs boast approximately 40 percent lower maintenance costs compared to their gas-powered counterparts, further enhancing the appeal of transitioning to electric vehicles.

The Biden Administration's proactive approach to incentivizing electric vehicle adoption not only aligns with its environmental objectives but also delivers tangible economic benefits to American consumers, positioning the nation at the forefront of clean transportation innovation and affordability.

Find more information on the Inflation Reduction Act’s clean vehicle tax credits here.

Source: Dep of the Treasury, June 12, 2024