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Improving Incentives for Clean Vehicle Purchases in the United States: Challenges and Opportunities

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  • J. R. DeShazo

Abstract

In recent decades, federal and state policymakers in the United States have adopted a variety of policy incentives to induce drivers to purchase advanced clean vehicles aimed at reducing externalities within the transportation sector. Focusing on plug-in electric vehicles, I examine the challenges to and opportunities for improving these policies. Recent research raises concerns about whether the incentives actually reach the intended consumers because of eligibility restrictions, salience of instruments in consumer decision making, and the impact of incentives across consumers and producers. The targeting of different externalities complicates policy design choices, which are further limited because purchase incentives do not affect driving behavior. Finally, an emerging literature suggests that the efficiency and cost effectiveness of these incentives may be improved by strategically targeting specific types of vehicles and consumers, as well as by combining them with vehicle retirement incentives. (JEL: Q53, Q55, R40)

Suggested Citation

  • J. R. DeShazo, 2016. "Improving Incentives for Clean Vehicle Purchases in the United States: Challenges and Opportunities," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(1), pages 149-165.
    • Handle: RePEc:oup:renvpo:v:10:y:2016:i:1:p:149-165.
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    References listed on IDEAS

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    Cited by:

    1. Sheldon, Tamara L. & Dua, Rubal, 2018. "Gasoline savings from clean vehicle adoption," Energy Policy, Elsevier, vol. 120(C), pages 418-424.
    2. Caulfield, Brian & Furszyfer, Dylan & Stefaniec, Agnieszka & Foley, Aoife, 2022. "Measuring the equity impacts of government subsidies for electric vehicles," Energy, Elsevier, vol. 248(C).
    3. Pessoa, Joao Paulo & Santos, Roberto Amaral & Chimeli, Ariaster, 2023. "Natural Gas Vehicles: Consequences to Fuel Markets and the Environment," SocArXiv 7tvgy, Center for Open Science.
    4. Zunian Luo, 2022. "Cap or No Cap? What Can Governments Do to Promote EV Sales?," Papers 2212.08137, arXiv.org.
    5. Oindrila Dey & Debalina Chakravarty, 2020. "Electric Street Car as a Clean Public Transport Alternative: A Choice Experiment Approach," Working Papers 2042, Indian Institute of Foreign Trade.
    6. Luo, Zunian, 2021. "Cap or no cap? What can governments do to promote EV sales?," MPRA Paper 113566, University Library of Munich, Germany.
    7. Jenn, Alan & Lee, Jae Hyun & Hardman, Scott & Tal, Gil, 2020. "An in-depth examination of electric vehicle incentives: Consumer heterogeneity and changing response over time," Transportation Research Part A: Policy and Practice, Elsevier, vol. 132(C), pages 97-109.
    8. Hardman, Scott & Chandan, Amrit & Tal, Gil & Turrentine, Tom, 2017. "The effectiveness of financial purchase incentives for battery electric vehicles – A review of the evidence," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 1100-1111.
    9. Li,Shanjun & Xing,Jianwei & Yang,Lin & Zhang,Fan, 2020. "Transportation and the Environment : A Review of Empirical Literature," Policy Research Working Paper Series 9421, The World Bank.
    10. Victor-Gallardo, Luis & Zúñiga, Mónica Rodríguez & Quirós-Tortós, Jairo & Jaramillo, Marcela & Vogt-Schilb, Adrien, 2024. "Policy options to mitigate the fiscal impact of road transport decarbonization: Application to Costa Rica," Energy Policy, Elsevier, vol. 185(C).
    11. Yang Ju & Lara J. Cushing & Rachel Morello-Frosch, 2020. "An equity analysis of clean vehicle rebate programs in California," Climatic Change, Springer, vol. 162(4), pages 2087-2105, October.
    12. Roberto Amaral-Santos & Ariaster Chimeli & Joao Paulo Pessoa, 2023. "Natural Gas Vehicles: Consequences to Fuel Markets and the Environment," Working Papers, Department of Economics 2023_07, University of São Paulo (FEA-USP).
    13. Burra, Lavan T. & Sommer, Stephan & Vance, Colin, 2024. "Free-ridership in subsidies for company- and private electric vehicles," Energy Economics, Elsevier, vol. 131(C).

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    More about this item

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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