A new study published by the US National Bureau of Economic Research suggests the vast majority of those who obtained a federal income tax credit for the purchase of an electric vehicle would have bought such a product anyways.
The study was conducted by researchers from Peking University in Beijing, Cornell University and Resources for the Future, an American non-profit focused on the environment and energy. While it found that many EV owners would have purchased their car whether a tax credit was offered or not, it did persuade some to go for the battery electric option.
“Federal income tax credits resulted in a 29 percent increase in EV sales, but 70 percent of the credits were obtained by households that would have bought an EV without the credits,” the study said.
In addition, it found that 74 percent of EV buyers in 2014 changed over from cars that have a fuel economy above 25 mpg. Vehicle models that were most commonly replaced by EVs were compact and mid-size sedans like the Honda Civic, Toyota Corolla and Chevrolet Cruze. Another 12 percent of EV buyers replaced a hybrid vehicle with the battery electric one.
“This substitution pattern suggests that EVs mainly attracted consumers who were originally choosing mid-size and fuel-efficient gasoline or hybrid vehicles, rather than gas-guzzlers such as large SUVs or trucks,” the study claims.
It’s important to note that this study was conducted in 2014, when many electric vehicles were more expensive and had less real world usability than they do now. That means the credit wouldn’t be enough to even out the cost for many buyers at the time. Additionally, everyone who bought an EV in 2014 would be considered an early adopter of alternative energy vehicles, so it’s no surprise that they were willing to shell out the money for one – tax credit or not.
It will be interesting to follow this subject and how the public reacts to such tax incentives as EVs become less expensive. General Motors claims it won’t be long before it can offer an EV comparable to one of its ICE products for the same price. VW is also pressing forward with an aggressive EV strategy and has plans to sell EVs in Europe (and likely North America as well) for under 20,000 euros (about $22,000 USD).