Report, An Analysis of US Subsidies for Electric Buses and Freight Trucks

This January 2022 issue brief analyzes the CO2 reductions possible under various potential subsidies for electric transit buses and certain trucks. It offers a new computational model that accounts for the effects of subsidizing 30 percent of the up-front purchase cost of transit buses, day cabs, and sleeper cabs to estimate the uptake, fiscal costs, and CO2 benefits of the subsidies through 2035, relative to a baseline case that does not include the subsidies. This analysis is meant to represent recent legislative proposals, such as the commercial vehicle investment tax credit included in both the Clean Energy for America Act and the Build Back Better Act.

Assuming a moderate rate of pre-subsidy price decline, a 30% subsidy is modeled to cause electric bus, day cab, and sleeper cab sales to begin increasing around 2030 and achieve a 50 percent market share in 2035. Under more dramatic price declines, the model shows up to 80% market share.