Janet Yellen Secretary of the Treasury | Twitter Website
The U.S. Department of the Treasury and IRS have announced that consumers have saved over $1 billion in upfront costs on more than 150,000 clean vehicle purchases since January 1, 2024. This milestone is part of the Biden-Harris Administration's efforts to reduce transportation costs for Americans.
According to the announcement, consumers are saving an average of $1,750 annually on fuel and maintenance costs, amounting to $21,000 in savings over a typical 15-year vehicle lifespan compared to gasoline vehicles. For the 150,000 vehicles sold with this discount, this translates to approximately $262 million in annual savings on fuel and maintenance and up to $3.2 billion over the life of these vehicles.
Since President Biden’s Inflation Reduction Act was passed, there has been significant growth in the clean vehicle industry. In 2023, U.S. sales of passenger clean vehicles—comprising battery electric, fuel cell, and plug-in hybrids—reached around 1.5 million units, marking a record high and a 50 percent increase from the previous year.
"President Biden’s Inflation Reduction Act is lowering costs for electric vehicle purchases," stated Secretary of the Treasury Janet L. Yellen. "Consumers are saving up front and over time."
The Inflation Reduction Act includes mechanisms allowing consumers to transfer a clean vehicle credit (up to $7,500 for new vehicles and up to $4,000 for used ones) directly to registered dealers at the point of sale rather than waiting until they file taxes. This has resulted in more than $1 billion in financial benefits through advance payments for both new and used clean vehicles since January 1.
More than 90 percent of new clean vehicle transactions and approximately 80 percent of used transactions involve transferring these credits directly to dealers.
Treasury’s Office of Economic Policy estimates that electric vehicle owners will save between $18,000 and $24,000 more than if they had purchased comparable gasoline vehicles when considering discounted expected annual savings over a 15-year lifespan. The primary contributor to these savings is lower fuel costs; electricity per mile typically costs significantly less than gasoline.
Maintenance costs are also about 40 percent lower for electric vehicles compared to gas-powered cars due partly to fewer expenditures on engine oil, transmission services, spark plugs, and filters.
For further details on the Inflation Reduction Act's clean vehicle tax credits: click here.
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