The Effects of "Buy American": Electric Vehicles and the Inflation Reduction Act

Hunt Allcott, Reigner Kane, Maximilian S Maydanchik, Joseph Shapiro and Felix Tintelnot

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: We provide the first ex post microeconomic welfare analysis of the electric vehicle (EV) tax credits in the Inflation Reduction Act (IRA). Relative to pre-IRA policy, the credits generated $1.96 in domestic benefits per dollar of government spending, with taxpayer cost of $36,500 per additional EV. Relative to having no EV credits, they yielded $1.11 in domestic benefits per dollar of government spending. A leasing loophole that sidestepped domestic content rules created negative domestic benefits. A prominent example of green industrial policy, the credits harmed foreign countries by shifting surplus to domestic producers and helped them by decreasing CO2 emissions.

Keywords: Social; and; Behavioral; Sciences (search for similar items in EconPapers)
Date: 2026-03-27
New Economics Papers: this item is included in nep-ene and nep-tre
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Working Paper: The Effects of “Buy American”: Electric Vehicles and the Inflation Reduction Act (2024)
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