Evaluating Tax Rebates for Hybrid Vehicles

This presentation uses data on car sales by model across Canadian Provinces to estimate the effect of provincial tax rebates for hybrid electric vehicles. We ask two questions: what is the effect of the tax rebate on the sales of hybrids? And secondly, which vehicles do consumers forgo in response to the tax incentive?

Our results indicate that tax rebates had a large and significant effect on raising the market share of hybrid electric vehicles. We also find that Intermediate cars and Intermediate Sports Utilities experience a significant loss in market share associated with the rebate. We use this information to estimate fuel savings associated with the rebate.