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

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

No 33032, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: F18 H23 L11 Q58 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-ene, nep-env, nep-int and nep-tre
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Working Paper: The Effects of "Buy American": Electric Vehicles and the Inflation Reduction Act (2026)
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