CBO estimates that federal policies to promote the manufacture and purchase of electric vehicles, some of which also support other types of fuel-efficient vehicles, will have a total budgetary cost of about $7.5 billion through 2019. Tax credits for buying electric vehicles—which account for about one-fourth of that cost—are likely to have the greatest impact on vehicle sales. The electric vehicles that are the focus of this study fall into two broad classes:
- Plug-in hybrid vehicles are powered by an internal combustion engine, which runs on gasoline or other liquid fuels, and by an electric motor, which is powered in part by an externally rechargeable battery.
- All-electric vehicles, also known as battery electric vehicles, run entirely on battery power.
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