Exploring the Impact of the Federal Tax Credit on the Decision to Lease or Purchase a PEV in California

Using a sample of approximately 7,000 California PEV drivers recruited from California Clean Vehicle Rebate Program applicants, two logistic regression models are specified to analyze responses by PEV lessees and purchasers to the question of what they would do in the absence of the federal tax credit. Possible responses include: purchase/lease the same PEV, switch to a different PEV, switch to a conventional or hybrid (non-plug in) vehicle, or not acquire a vehicle at all. Several key insights are found: higher discounts from the tax credit increase the probability of lessees indicating they would not lease a PEV at all. For purchasers, in addition to not purchasing any vehicle at all, the probability of purchasing a conventional vehicle, or another PEV also increase. These findings could have implications for California’s ability to reach its ZEV milestones and are important to consider due to recent changes to the US federal tax credit. Our findings indicate that many PEV adopters would likely not adopt their PEV without the tax credit, potentially more so for leased compared to purchased vehicles. There are also unique results for lessees related to the impact of home ownership. Renters are more likely than homeowners to lease a conventional vehicle than a PEV in the absence of the tax credit. This finding contributes to the literature which finds homeowners to be more likely to adopt a PEV than renters, emphasizing the importance of access to at-home charging for PEV adoption. These results show how incentives may be more influential for adoption decisions in the PEV lease market point to factors associated with consumers’ PEV adoption behavior in the absence of the federal tax credit. View the NCST Project Webpage