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Americans want EV tax incentives. But are they ready to lose gas cars forever?

By Rachel Koning Beals

A Pew survey finds a broad majority of Americans support providing incentives for electric vehicles, like those nearing approval in Congress, but they are more divided when it comes to an actual EV purchase

Americans like the idea of government and industry sweeteners to accelerate the move into all-electric or gas-electric hybrid vehicles.

But respondents to a recent Pew Research Center survey found Americans become more divided when asked if they personally would consider buying an EV the very next time they're shopping for a new car, SUV or pickup truck.

Mass electric-vehicle adoption, and more model offerings from the automakers competing with Tesla(TSLA), are considered a key part of the country's efforts to halve its greenhouse gas emissions as soon as 2030 and hit net-zero emissions by 2050.

Yet Pew found that a majority of those asked oppose phasing out gas-powered vehicles entirely in the years ahead. The poll was conducted this spring, before the Senate late last month surprised voters with an apparenet compromise on an all-but-dead spending bill that would revive EV tax credits and more.

Read: Democratic healthcare and climate package looks likely to become law, but SALT issue presents hurdle, analysts say

Details are still be hashed out this week, but lawmakers have reportedly agreed to a conditional $4,000 tax credit for the purchase of used EVs and $7,500 for new ones.

Read more:Mulling an EV? A first-ever $4,000 tax incentive for used electric vehicles is part of Manchin's compromise

Overall, two-thirds of Americans support providing incentives to increase the use of electric and hybrid vehicles, the Pew survey found. Democrats and independents who lean toward the Democratic Party are much more likely than Republicans and GOP leaners to say they favor incentives to increase the use of electric vehicles (84% to 46%).

Read: More and more right-leaning Americans worry about climate change, but aren't ready to give up gas stoves

About four-in-ten Americans (42%) say they would be very or somewhat likely to seriously consider purchasing an EV the next time they're looking for a new car or truck. A slightly larger share (45%) say they would be not too or not at all likely to do this, while 13% say they do not plan to purchase a vehicle in the future.

The share of Americans who are very or somewhat likely to purchase an electric car or truck is about the same as in April 2021. Since then, the price of gas has increased substantially, from an average of $2.95 per gallon in April 2021 to $4.55 in May 2022, the time of the survey. Vehicle prices have also increased amid broader inflationary pressures. On the whole, Americans view electric vehicles as more expensive than gas-powered vehicles, a 2021 Pew survey found.

Certainly, EV buying isn't just about the tax breaks and sticker prices. Would-be EV buyers are weighing the potential inventives against scarce inventory and vital semiconductor chip shortages. Cars, trucks and SUVs, especially EVs, are now much less mechanical and more digital.

Those most inclined to consider an EV purchase in the future include younger adults, urban dwellers, Democrats and those who already own a hybrid or all-electric vehicle, according to the Center's recent survey.

A 55% majority of adults ages 18 to 29 say they are very or somewhat likely to consider an electric vehicle the next time they buy a vehicle.

And it may take greater incentives to make EVs affordable for this group that's more keen on adoption.

The Senate's reworked deal also includes a cap on the suggested retail price of eligible vehicles of $55,000 for new cars and $80,000 for pickups and SUVs. Credits would be capped to an income level of $150,000 for a single filing taxpayer and $300,000 for joint filers for new vehicles, and at $75,000 and $150,000 for used cars.

Related: Tesla's Model Y is the hottest used car in the U.S. right now

Read: Tesla reports better-than-expected Q2 profit, jump in sales

Proposed legislation removes prior requirements that called for qualified vehicles to have solely plug-in electric drive motors. The new version leaves out a 200,000-vehicle-per-manufacturer cap that automakers fought against. That means Tesla(TSLA), GM(GM) and Toyota(7203.TO), which had all reached the cap, can lure buyers with this tax break yet again.

Among the Pew-surveyed Americans who said they are at least somewhat likely to consider purchasing an electric vehicle, large majorities say helping the environment (73%) and saving money on gas (71%) are major reasons. They are far less likely to say keeping up with the latest trends in vehicles is a major reason they would be likely to purchase an electric vehicle (10%).

And while big-ticket vehicles are the type of purchase that could move needle in slowing climate change, it's not just this segment of the economy seeing traction.

The Pew survey also found that majorities of Americans overall are supportive of several other policies to address climate change, including requiring power companies to use more energy from renewable sources (ICLN)

From EVs to AVs, stay on top of the massive changes coming to automobiles. Join Tom Fennimore, CFO of Luminar Technologies, at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York.

-Rachel Koning Beals

 

(END) Dow Jones Newswires

08-02-22 1426ET

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