Americans have now received more than $1 billion in new credits and subsidies for buying electric vehicles (EVs) under the Inflation Reduction Act, according to an announcement by the U.S. Treasury Department on Wednesday. This program, which began in January, has issued over 150,000 payments in total, with over 125,000 of those being advance tax credits specifically for new electric cars.
Secretary of the Treasury Janet L. Yellen emphasized the impact of President Biden’s Inflation Reduction Act on lowering costs for electric vehicle purchases. She highlighted that since January, American consumers have saved over $1 billion upfront. These savings are not just immediate; they also expand consumer options and provide opportunities for companies to grow their customer base.
Yellen pointed out the long-term financial benefits for consumers, citing potential savings of $1,750 annually on gas and maintenance costs, with a cumulative savings of $21,000 over the lifetime of an electric vehicle. These figures are based on analysis from Energy Innovation Policy & Technology, supported by Treasury’s Office of Economic Policy.
The administration’s announcement included data demonstrating that electric vehicles offer significant savings compared to traditional gasoline-powered cars. Over a 15-year vehicle lifespan, EV owners could save between $18,000 to $24,000 due to reduced fuel expenses, which are the largest contributor to these savings. Despite varying costs of fuel and electricity based on location, electric vehicles generally have lower per-mile fuel costs compared to their gasoline counterparts.
Adding to fuel savings, maintenance costs for EVs are estimated to be about 40% lower than those for internal combustion engine (ICE) vehicles, according to the administration’s analysis.
While the Inflation Reduction Act initially favored electric and plug-in hybrid vehicles manufactured in the United States, the administration has recently eased some restrictions related to EV battery sourcing. This adjustment could potentially allow more vehicles to qualify for credits in the upcoming model years, as the implementation details are finalized.
The program aims to encourage the adoption of electric vehicles by making them more affordable and economically attractive for American consumers. As the administration continues to refine and expand these incentives, it anticipates further growth in the EV market and benefits for both consumers and the economy.
