In this Sustainable Energy Seminar, Dr. Cheng He, Assistant Professor of Marketing, will discuss the effects of government incentives for "green" products, particularly consumer tax credits for electric vehicles.

Abstract:

Governments worldwide have spent billions of dollars on monetary incentives for consumers to encourage the adoption of eco-friendly (“green”) products. There is little consensus on the effectiveness of delayed monetary incentives with complex structures such as tax credits. We examine tax credit incentives’ impact on vehicle sales and carbon emissions using incentive changes in South Carolina and Oregon via various quasi-experimental approaches and assess the generalizability of our findings to Colorado. Unlike recent studies showing an insignificant or a negative correlation between tax credits and electric vehicle adoption, we find unit sales of incentivized plug-in-hybrid electric vehicles–PHEVs–increase by an average of 3.7% following a $2,000 incentive. PHEV sales remain unchanged after the incentive's termination, implying a positive net sales effect. We also explore the incentive's impact on purchase funnel stages. In the awareness stage, the incentive’s positive effect on PHEV demand peaks around the tax-filing period. As for the consideration stage, the incentive does not expand the consumer pool considering PHEVs. In the conversion stage, the incentive generates more sales for PHEVs in counties where 1) consumers are more likely to have PHEVs in their consideration sets regardless of the incentive (i.e., Democratic counties), and 2) consumers value cost-saving more (i.e., counties with lower-middle income). The heightened demand for PHEVs stems from the substitution from gasoline vehicles with high fuel efficiency. The estimated cost of reducing carbon emissions through tax credits is less than the cost of tax rebates for conventional hybrids and subsidies for residential solar panels.

This event is offered both in-person at the Wisconsin Energy Institute and online through Zoom Webinar. If attending online, registration is required. Click here to register for this and all other webinars as part of the Sustainable Energy Seminar series.