Please note!

This fact brief was originally published as an experiment to test the concepts behind fact briefs.

Readers should be aware that while there is still a lot of useful information in fact briefs like this one, not all of them reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date, don't hesitate to contact us at support@gigafact.org.

FACT BRIEF

Are federal tax credits on electric cars effectively a subsidy to more affluent buyers?

Monday, September 28, 2020

By Allegra Taylor

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YES

Affluent Americans get the greatest benefits from tax credits for buying electric vehicles.

Since 2010 the U.S. government has offered a federal income tax credit of up to $7,500 for purchasers of electric vehicles. The credit is phased out after a manufacturer has sold 200,000 qualified vehicles, a threshold crossed already by General Motors and Tesla, whose vehicles no longer qualify.

A 2019 survey found tax incentives were a significant motivator among electric vehicle buyers. In 2020, 57% of new plug-in hybrid buyers and 60% of new electric vehicle buyers had incomes of at least $100,000. Though electric vehicles can save drivers in running costs, they cost more upfront than gas-powered cars—$19,000 more, on average. A 2018 study notes the "reverse Robin Hood impact" of the subsidies.

This fact brief is responsive to conversations such as this one.

Sources

Fueleconomy.gov: Available federal tax credits for electric vehicles

Department of Energy: Qualified plug-in electric vehicle tax credit

Pacific Research: Costly subsidies for the rich

Green Car Reports: Electric car buyers survey

Hedges & Company: New car buyer demographics 2020

Pacific Research: Costly subsidies for the rich

ABOUT THE CONTRIBUTOR

Gigafact

Between 2020 and 2022, under close editorial supervision, Gigafact contracted a group of freelance writers and editors to test the concepts for fact briefs and provide inputs to our software development process. We call this effort Gigafact Foundry. Over the course of these two years, Gigafact Foundry writers published over 1500 fact briefs in response to claims they found online. Their important work forms the basis of Gigafact formats and editorial guidelines, and is available to the public on Gigafact.org. Readers should be aware that while there is still a lot of relevant information to be found, not all fact briefs produced by Gigafact Foundry reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date and need to be looked at with fresh eyes, don't hesitate to contact us at support@gigafact.org.

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About fact briefs published on Gigafact

Fact briefs are short, credibly sourced summaries that offer “yes/no” answers in response to claims found online. They rely on publicly available, often primary source data and documents. Fact briefs are created by contributors to Gigafact —a nonprofit project looking to expand participation in fact-checking and protect the democratic process. See all fact briefs here.