Accessing clean vehicles: How dealer requirements limit equity and emissions benefits under the inflation reduction act’s preowned EV credit

• Low-income households are disproportionally more likely to benefit from key electric vehicle provisions in the Inflation Reduction Act (IRA). • However, up to 8.4 million of these households may be priced out of the program owing to heterogeneity in vehicle procurement pathway restrictions specified by IRA. • This risks preventing up to 113.9 million tons of CO 2 e in lifecycle emissions reduction benefits from being realized. • Changing the procurement pathways eligible for financial assistance would address this inequity. Preowned vehicles are disproportionally purchased by low-income households, regardless of propulsion type. Low-income households have long faced financial challenges to purchasing electric vehicles (EVs), especially absent financial incentives. Yet, those households would disproportionally benefit from EV adoption given the operating cost savings offered by electrification. To help realize this benefit, provisions of the 2022 Inflation Reduction Act (IRA) offer preowned EV purchasing incentives. How effective might these efforts be, and how might eligibility requirements governing procurement pathways impact such efficacy? We address these questions by combining nationally representative data from the U.S. Census Bureau, the National Household Travel Survey, and a detailed vehicle purchase dataset together with lifecycle emissions estimates derived from the Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) model. Using these data, we evaluate how the IRA’s preowned EV credit influences equity and emissions outcomes, focusing on the dealer-only eligibility requirement that impacts which households can benefit. Our findings are fourfold. First, we demonstrate that although low-income households are more likely to benefit from preowned EV purchasing incentives offered by IRA, up to 8.4 million low-income households may be ineligible owing to heterogeneity in vehicle procurement pathways (i.e., where a vehicle is purchased from). Second, we show that program ineligibility risks preventing up to 113.9 million tons of CO 2 e in lifecycle emissions reduction benefits from being realized, reducing total emissions benefits by approximately 31%. Third, we find that procurement pathways interact with vehicle price. More expensive preowned vehicles are purchased directly from commercial dealers, while less expensive preowned vehicles are purchased from private sellers. These procurement pathways matter because qualification for IRA’s incentives necessitates purchasing solely from commercial dealers (versus private sellers). Fourth, we demonstrate that while incentives motivating preowned vehicle purchases from commercial dealers may be effective if the vehicle costs more than $6,000, this effectiveness diminishes at higher price points. The implications of our findings on decarbonization efforts and energy policy are discussed.