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US Government Could have saved around $2B Giving EV Buyers Cash Instead of Tax Credit, According to a Study

As it stands, when a buyer purchases an electric vehicle (EV), they can receive up to a $7,500 tax credit rebate on their taxes when they file them in April (pending they meet requirements). However, George Washington University conducted a study asking potential car shoppers if they would rather receive the rebate on their tax returns or, receive an immediate cash incentive that would be less than the original rebate.

The study

The study conducted in Washington, D.C., asked 2,170 potential car shoppers from ages 19-92 about their preferences on potential incentives when it comes to buying an electric vehicle. Some of the questions included things on sales tax exemptions, tax deductions, tax credits (which are currently offered by the U.S. government), or immediate cash rebates. The study showed that a vast majority of potential car shoppers preferred the immediate cash rebate over any other incentive offered. Laura Roberson, the lead author of the study, said that for buyers, “…$7,500 in April when I file taxes is the same to me [a hypothetical EV buyer] as $6,000 if you gave me that money at the point of sale.”

Missing Out On Big Savings

If the federal government would have gone down an immediate cash rebate route and handed out checks for roughly $6,000 at the time of purchase, the government could have saved roughly $2.07 billion from 2011 to 2019 and it would have continued to have the same overall impact on EV buying habits. The author of the study also notes these checks would have been extremely more equitable for buyers, as well as lower-income shoppers and people using cash twice as much as the average buyer. Education on these credits would have also been something the government should have focused on as according to the study 67% of participants weren’t even sure what the current system was.

Wrap Up

Unfortunately, this study will likely not have a major impact on the government’s decision-making process, as there are currently talks being had to remove the vehicle cap on the EV credit, and nothing on a cash incentive. Regardless, giving customers a check on site might be a better option for the government to leverage in the future. If you ever have any questions on the EV tax credit, be sure to call your trusted financial advisor for assistance in claiming it.

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