WASHINGTON, June 12, 2024 — The U.S. Department of the Treasury and the Internal Revenue Service (IRS) announced that consumers have saved over $1 billion in upfront costs on the purchase of more than 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.
The savings translate to an average annual reduction of $1,750 in fuel and maintenance costs per vehicle, or $21,000 in discounted savings over the typical 15-year lifespan of a vehicle compared to gasoline counterparts. For the more than 150,000 vehicles sold with the upfront discount, this amounts to approximately $262 million saved annually on fuel and maintenance, and up to $3.2 billion in lifetime savings.
Since the passage of President Biden’s Inflation Reduction Act, the clean vehicle industry in the U.S. has seen substantial growth. In 2023, the U.S. recorded around 1.5 million passenger clean vehicle sales, including battery electric, fuel cell, and plug-in hybrids—a 50 percent year-over-year increase from 2022 and the highest annual total ever. The latest announcement underscores the significant cost savings that Americans are now benefiting from.
“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 Secretary of the Treasury Janet L. Yellen. “Consumers are saving upfront 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 to transfer 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 mechanism allows consumers to receive a significant upfront discount at the point of sale rather than waiting to file their taxes. Research indicates that consumers overwhelmingly prefer this immediate rebate.
Since this mechanism went into effect on January 1, 2024, more than $1 billion in financial benefits have been realized through the clean vehicle advance payment program for both new and used clean vehicles. Over 150,000 advance payments have been issued, including more than 125,000 for tax credits related to new clean vehicles. The option to transfer the tax credit to the dealer has proven very popular, with more than 90 percent of new clean vehicle transactions and approximately 80 percent of used clean vehicle transactions involving a transfer of the credit to the dealer.
According to analysis from Energy Innovation Policy & Technology, the Treasury’s Office of Economic Policy estimates that owners of electric vehicles will save $18,000 to $24,000 over the 15-year lifespan of the vehicle compared to gasoline vehicles. The largest contributor to these savings is fuel costs, which are typically substantially lower for electric vehicles. For example, the average gasoline cost per 1,000 miles is $120 for gas-powered vehicles, compared to $60 for electric vehicles. Maintenance costs are also about 40 percent lower for EVs, due to fewer expenses on engine oil, transmission service, spark plugs, and engine filters.
This announcement highlights the financial benefits and increased adoption of clean vehicles in the U.S., driven by government incentives and the ongoing push towards sustainable transportation.