The U.S. Department of the Treasury and IRS proudly announced yesterday that American consumers have collectively saved over $1 billion in upfront costs when purchasing more than 150,000 clean vehicles since January 1, 2024.
This remarkable achievement is a significant milestone in the Biden-Harris Administration’s efforts to lower transportation costs for Americans.
Fuel and Maintenance Savings: A Win-Win for Consumers and the Environment
Furthermore, this milestone translates to an average annual savings of $1,750 per consumer on fuel and maintenance costs compared to similar gasoline vehicles. Over the typical 15-year lifespan of a vehicle, this equates to a substantial discount of $21,000.
For the 150,000 vehicle sales that have utilized the upfront discount, this translates to a collective annual savings of approximately $262 million on fuel and maintenance and up to $3.2 billion in savings over the lifetime of the vehicles.
Inflation Reduction Act Fuels Clean Vehicle Industry Growth
Since the passage of President Biden’s Inflation Reduction Act, the clean vehicle industry in the U.S. has experienced unprecedented growth.
In 2023, the country witnessed around 1.5 million passenger clean vehicle sales (including battery electric, fuel cell, and plug-in hybrids), marking the highest annual total ever and a 50% increase from the previous year.
Treasury Secretary Janet L. Yellen emphasized the positive impact of the Inflation Reduction Act on both consumers and businesses.
The Act’s upfront discount is not only empowering consumers with more choices but also opening doors for companies to expand their customer base.
Transferable Tax Credits Drive Adoption
A key provision of the Inflation Reduction Act is the mechanism to transfer the 30D clean vehicle credit (up to $7,500) and 25E previously owned clean vehicle credit (up to $4,000) to registered dealers.
This mechanism offers consumers a substantial upfront discount and expands the accessibility of the credits by making them available at the point of sale.
Since its implementation on January 1, 2024, the clean vehicle advance payment program has delivered over $1 billion in financial benefits to consumers at the point of sale for both new and used clean vehicles.
The option to transfer the tax credit to the dealer has proven immensely popular, with over 90% of new clean vehicle transactions and approximately 80% of used clean vehicle transactions utilizing this option.
Long-Term Savings for Electric Vehicle Owners
Building upon analysis from Energy Innovation Policy & Technology, the Treasury’s Office of Economic Policy estimates that electric vehicle owners can save between $18,000 and $24,000 over the vehicle’s lifespan compared to a comparable gasoline vehicle.
Fuel savings, primarily due to the lower cost per mile for electricity, are the most significant contributor to this difference.
In addition to fuel savings, electric vehicles typically have 40% lower maintenance costs than gas-powered cars. This is attributed to lower expenditures on engine oil, transmission service, spark plugs, and engine filters.
For more detailed information on the Inflation Reduction Act’s clean vehicle tax credits, please refer to the official resources.