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This paper examines the effect of the federal EV income tax subsidy on EVsales. I find that reduction of the federal subsidy caused sales to decline by$43.2 \%$. To arrive at this result, I employ historical time series data fromthe Department of Energy Alternative Fuels Data Center. Using the fact that thesubsidy is available only for firms with fewer than 200,000 cumulative EVsales, I separate EV models into two groups. The treatment group consists ofmodels receiving the full subsidy, and the control group consists of modelsreceiving the reduced subsidy. This allows for a difference in differences(DiD) model structure. To examine the robustness of the results, I conductregression analyses. Due to a relatively small sample size, the regressioncoefficients lack statistical significance. Above all, my results suggest thatfederal incentives designed to promote EV consumption are successful in theirobjectives.

Cap or No Cap? What Can Governments Do to Promote EV Sales?