Breakthrough Institute Study Finds Targeted Electric Vehicle Subsidies More Economically Efficient in Reducing Emissions

Washington D.C. - The Breakthrough Institute has released a new study examining the economic efficiency of electric vehicle (EV) subsidies in reducing carbon emissions. The study, presented at the National Bureau of Economic Research ’s ‘Economics of Energy Use in Transportation Conference,’ finds that offering blanket EV subsidies are an inefficient means of reducing emissions.

The study's lead author, Ashley Nunes, along with two co-authors, analyzed the impact of subsidies on emissions reductions. Unlike previous work that has largely supported the value of subsidies, their study accounts for battery replacements, and the national electric grid's ability to make EVs less polluting. Taking those factors into consideration, the authors find that compared to blanket subsidies currently authorized by Congress, directing subsidies solely for single-vehicle households and towards high utilization vehicles (like taxis), are far more likely to produce net financial benefits and reduce emissions.

The findings are especially significant for communities of color, who are less likely to own multiple vehicles and are disproportionately represented in the taxi and mobility-on-demand industry.

Congress is currently debating whether EV subsidies should continue and, if so, how they should be targeted. Nunes's study highlights the need to ensure that such programs are targeted in ways that do the most good and maximize emissions reductions per dollar spent.

The Breakthrough Institute's study emphasizes the importance of targeted subsidies for high utilization vehicles and presents a path towards more effective EV subsidies that reduce emissions and produce net financial benefits.