Full Title: Effects of Federal Tax Credits for the Purchase of Electric Vehicles
Author(s): Congressional Budget Office
Publisher(s): Congressional Budget Office
Publication Date: 9/2012



The federal government has adopted several policies to encourage the production and purchase of electric vehicles, which run partly or entirely on electric power stored in a battery that can be recharged from a standard home outlet. Such vehicles are fairly new, having been reintroduced commercially in the United States late in 2010. Federal policies to promote their manufacture and purchase include tax credits for buyers of new electric vehicles, financial support for the industry that produces them, and programs that promote efforts to educate consumers about electric vehicles and improve the infra- structure for recharging them. The Congressional Budget Office (CBO) estimates that such policies, some of which also support other types of fuel-efficient vehicles, will have a total budgetary cost of about $7.5 billion through 2019. Of those federal incentives, the tax credits for buying electric vehicles—which account for about one-fourth of that budgetary cost—are likely to have the greatest impact on vehicle sales. The tax credits apply to the first 200,000 electric vehicles sold by each manufacturer for use in the United States, after which the credits gradually phase out.