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U.S. Treasury Announces Over $1 Billion in Upfront Savings for Electric Vehicle Buyers

-Editorial

The U.S. Department of the Treasury and the IRS have reported that consumers have saved more than $1 billion in upfront costs on the purchase of over 150,000 clean vehicles since January 1, 2024. This milestone marks a significant achievement in the Biden-Harris Administration’s efforts to reduce transportation costs for Americans.

On average, these savings translate to $1,750 annually on fuel and maintenance costs, or approximately $21,000 over the typical 15-year lifespan of a vehicle, when compared to gasoline vehicles. For the 150,000 vehicles sold with this upfront discount, this equates to around $262 million in annual savings and up to $3.2 billion over the vehicles’ lifetime.

This development follows the significant growth in the clean vehicle industry since the passage of President Biden’s Inflation Reduction Act. In 2023, the U.S. saw record sales of 1.5 million passenger clean vehicles, a 50 percent increase from 2022. The new announcement highlights the financial benefits that Americans are reaping from this industry boom.

“President Biden’s Inflation Reduction Act is lowering costs for electric vehicle purchases, with more than $1 billion in upfront savings for American consumers since January. This discount is increasing consumer choices and creating new opportunities for companies to expand their customer base,” said Treasury Secretary Janet L. Yellen. “Consumers are saving up front and over time, with $1,750 savings on gas and maintenance each year and $21,000 saved over the lifetime of a vehicle.”

The Inflation Reduction Act introduced a mechanism allowing the transfer of the 30D clean vehicle credit of up to $7,500 and the 25E previously owned clean vehicle credit of up to $4,000 to registered dealers. This enables consumers to benefit from the credit at the point of sale rather than when filing taxes. Research indicates that consumers overwhelmingly prefer this immediate rebate.

Since January 1, 2024, more than $1 billion in financial benefits have been realized through this advance payment program, covering both new and used clean vehicles. More than 150,000 advance payments have been issued, with over 125,000 relating to new clean vehicle credits. The option to transfer the tax credit to the dealer has proven very popular, being utilized in over 90 percent of new clean vehicle transactions and around 80 percent of used clean vehicle transactions reported through IRS Energy Credits Online.

Building on analysis from Energy Innovation Policy & Technology, the Treasury’s Office of Economic Policy estimates that, when considering expected annual savings over a vehicle’s 15-year lifespan, electric vehicle owners will save $18,000 to $24,000 more than if they had purchased a comparable gasoline vehicle. Fuel costs are the largest contributor to these savings, with fuel costs per mile for electric vehicles being substantially lower than for gasoline-powered vehicles.

Additionally, maintenance costs for electric vehicles are typically 40 percent lower than for gasoline-powered cars, as electric vehicles incur fewer expenses related to engine oil, transmission service, spark plugs, and engine filters.

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