The U.S. Department of the Treasury and IRS have announced that consumers have saved over $2 billion in upfront costs on the purchase of more than 300,000 clean vehicles since January 1, 2024. This announcement marks a significant milestone in the Biden-Harris Administration's efforts to reduce transportation costs for Americans.
According to a 2022 analysis by Energy Innovation, consumers could save an average of $1,750 annually on fuel and maintenance costs. Over a typical 15-year vehicle lifespan, this would amount to $21,000 in discounted savings compared to gasoline vehicles. For the over 300,000 vehicle sales that utilized the upfront discount so far, this equates to around $525 million annually in fuel and maintenance savings and up to $6.3 billion over the life of these vehicles.
Since the passage of President Biden’s Inflation Reduction Act, there has been significant growth in the clean vehicle industry. In 2023, the U.S. saw around 1.5 million passenger clean vehicle sales – a record high and a 50% increase from 2022.
"The Biden-Harris Administration’s Inflation Reduction Act is lowering upfront costs for electric and plug-in hybrid vehicles, saving Americans more than $2 billion since January," said Secretary of the Treasury Janet L. Yellen. "These savings are giving consumers new choices and helping automakers and dealers attract new customers and grow their businesses."
The Inflation Reduction Act created mechanisms for transferring up to $7,500 as a clean vehicle credit (30D) and up to $4,000 as a previously owned clean vehicle credit (25E) directly to registered dealers at the point of sale rather than when buyers file their taxes.
Since this mechanism went into effect on January 1, 2024, more than $2 billion in financial benefits have been realized through advance payments for both new and used clean vehicles. Of these advance payments issued, more than 250,000 were related to tax credits for new clean vehicles.
Treasury’s Office of Economic Policy estimates that owners of electric vehicles will save between $18,000 to $24,000 over a vehicle's lifespan compared to owning gasoline vehicles due mainly to lower fuel costs per mile for electric vehicles.
In addition to fuel savings, maintenance costs are typically about 40% lower for EVs compared to gas-powered cars. The report by Energy Innovation: Policy & Technology assumes maintenance costs at roughly $0.06 per mile for EVs versus $0.10 per mile for gas-powered cars.
For more information on the Inflation Reduction Act’s clean vehicle tax credits, please click here.
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