Vehicle electrification is an important pathway to reducing global greenhouse gas emissions. The supply chain for electric vehicle battery materials relies heavily on China, a dependency that can leave the US vulnerable to supply chain disruptions and geopolitical shifts. The Inflation Reduction Act (IRA) offers meaningful incentives for building batteries in the US and diversifying the supply chain, but some loopholes exist.

A recent study by researchers in Carnegie Mellon University’s College of Engineering has analyzed how much impact the IRA is likely to have on incentivizing vehicle electrification and reducing supply chain vulnerabilities. Anthony Cheng, Ph.D. student in Engineering and Public Policy (EPP); Erica Fuchs, professor in EPP; and Jeremy Michalek, professor in EPP and mechanical engineering and director of Carnegie Mellon’s Vehicle Electrification Group, contributed to this research.

The findings are published in the journal Nature Energy.

The total credits offered through the IRA would enable a manufacturer to receive more in tax credits than the total cost of battery production, but qualifying for the full range of credits would be difficult, Michalek explained.

In particular, the 30D New Clean Vehicle Credit, which offers $7,500, can only be claimed on vehicles for which US-designated “Foreign Entities of Concern”—including China, Russia, Iran, and North Korea—played no role in the supply chain, Michalek said.

In a related study earlier this year, EPP researchers analyzed the extent to which electric vehicle supply chains are vulnerable to disruptions, with a focus on China. That study found that for virtually all chemistries, the entire supply chain would be profoundly affected if China’s exports were disrupted.

At the same time, another recent study by EPP researchers found that electric vehicle manufacturing stimulates the job market, as these vehicles require more jobs per vehicle produced than their conventional counterparts.

The new 30D credit offers a major incentive for automakers in the US and allied countries to focus on their own production means and find ways to develop alternatives to Chinese materials in the supply chain, Michalek explained.

However, a major loophole exists in that the restriction on Chinese-origin materials only applies to vehicles sold. An automaker can avoid the restriction by leasing vehicles and instead claiming the 45W Commercial Clean Vehicle Credit, which is currently worth the same amount as the 30D credit.

A supply chain’s flexibility for diversification does not always line up with its credit eligibility. Notably, lithium iron phosphate batteries have more potential to reduce supply chain vulnerabilities and qualify for incentives, but they have smaller total available incentives than nickel- and cobalt-based batteries.

The study found that the IRA primarily incentivizes downstream battery manufacturing diversification, whereas the impact on upstream supply will depend on how automakers respond to Foreign Entities of Concern and leasing rules.

If enough automakers successfully pivot toward a more lease-heavy business model to skirt the restrictions, the policy may need to evolve in order to remain effective, Michalek said, noting that researchers at Carnegie Mellon will continue to monitor the impact and outcome.

A recent study by the National University of Singapore Yong Loo Lin School of Medicine (NUS Medicine) analyzing the resilience of Singaporean families during the COVID-19 pandemic has uncovered significant findings that highlight how most families with young children successfully adapted to the challenges brought by the global crisis.

This research study was published in the Journal of Marriage and Family, titled “COVID-19 experiences and family resilience: A latent class analysis.”

Led by Prof Jean Yeung Wei-Jun from the Department of Paediatrics and the Human Potential Translational Research Programme at NUS Medicine, and Dr. Chen Xuejiao, former research fellow from the Department of Paediatrics at NUS Medicine, the research team looked at data from 2,818 families before and during the pandemic, and identified six distinct family groups with varying degrees of economic and relational resilience. Prof Jean Yeung and Dr. Chen Xuejiao are also currently researchers at A*STAR Institute for Human Development and Potential.

The data was drawn from a nationally representative longitudinal study—the Singapore Longitudinal EArly Development Study (SG-LEADS), and collected across two time periods—Wave One in 2018–2019 before the COVID-19 outbreak and Wave Two in 2021 during the second year of the COVID-19 pandemic. The findings were based on 2,818 households across all planning areas in Singapore.

The study, one of the first to examine the economic and relational responses of Singaporean families to the pandemic with a national sample, found that a majority of families showed considerable resilience:

• 31% of families were classified as “economically secure and relationally strengthened,” having improved family relationships.
• 28% were deemed “economically secure and relationally stable,” maintaining their pre-pandemic family dynamics.
• 11% were “economically struggling but relationally improved,” highlighting a significant relational boost despite financial difficulties.
• 14% were “economically struggling but relationally stable,” enduring economic challenges while preserving family relationships.

However, two groups faced more considerable challenges:

• 11% of families were “economically secure but relationally deteriorating,” where financial stability coexisted with worsening family dynamics.
• 4% were classified as “economically and relationally fragile,” suffering from both financial hardship and deteriorating family relationships.

The study emphasized that families with greater socioeconomic resources before the pandemic were more economically resilient, while families with strong relational factors, such as maternal self-efficacy, quality family time, low work-life conflict, and living in supportive neighborhoods, demonstrated higher relational resilience. Notably, government and community support played a critical role in sustaining both groups of economically struggling families during the crisis.

Key findings include:

• 42% of families were able to maintain their pre-pandemic family dynamics, with 44% reporting strengthened relationships despite varying economic challenges.
• Families with greater access to multilevel resources—including individual psychological strengths, family cooperation, and external support from communities and government—were better positioned to withstand adversity.
• Families with mothers who exhibited higher self-efficacy and confidence helped foster positive family dynamics.
• The study highlighted the vital role of family cooperation, where mothers, supported by fathers, managed lower work-life conflict and quality of family time, contributing to a more supportive and cohesive family relationship.
• Family relationships deteriorated when the mother experienced work-life conflict such as shouldering the majority of childcare responsibilities while the father had the flexibility to work from home, and when the quality of family time worsened.
• Families residing in cohesive and safe neighborhoods were better able to preserve family well-being under environmental stress.
• Government and community support emerged as significant factors for economically disadvantaged families, underscoring the importance of external assistance in times of crisis.

“Our findings demonstrate that family resilience is not uniform, and it’s shaped by a combination of economic, psychological, and social factors. At the individual level, personal psychological characteristics such as self-efficacy may foster a positive adaptation and growth of the family relations during the pandemic. At the family level, low childcare burdens, and effective couple cooperation, and high quality of family time can aid in maintaining or strengthening family relations during the pandemic.

“At the community level, living in a safe and cohesive neighborhood preserves and enhances family well-being when facing environmental stresses. Additionally, external resources such as government support may serve to alleviate the economic hardships and disruptions in family dynamics, especially for economically disadvantaged families,” said Prof Jean Yeung.

“Families can develop varying pathways to resilience depending on their resources and circumstances. It is essential to mobilize both individual and public resources to enable families to withstand and rebound from adversity and foster positive adaptations in the long term. This study offers valuable insights for designing more effective support and intervention programs and policies to assist families in times of crisis.”

The research provides critical data to inform future interventions aimed at strengthening family resilience, particularly in light of potential social inequalities that may be amplified during crises like the COVID-19 pandemic.

The study is part of SG-LEADS, a large nationally representative longitudinal study examining the impact of COVID-19 on Singaporean families with young children. It sheds light on the complex relationship between economic and relational resilience and emphasizes the need to mobilize both public and private resources to support family well-being in the face of adversity.

A new study shows that electric vehicle tax credits under the Inflation Reduction Act reduced pollution and boosted U.S. automakers, but largely benefited buyers who would have purchased EVs without subsidies.

New research by a team of economists shows that electric vehicle tax credits under the Inflation Reduction Act (IRA) have decreased climate pollution and boosted American car manufacturers, but at a price. Most car buyers benefiting from the subsidy would have purchased an electric vehicle anyway, raising questions about the taxpayer dollars spent pursuing the cleaner energy policy.

The study, published Oct. 7 as a working paper by the National Bureau of Economic Research, offers the most comprehensive look yet at the economic effects of the electric vehicle (EV) subsidies allowed for in the Inflation Reduction Act of 2022. Overall, the news is good: The EVs purchased after the law took effect have increased American automaker profits, put money into the pockets of consumers who receive the maximum $7,500 tax credit, and benefited the environment.

In economic terms, the researchers conclude that the new EV tax subsidies have reaped $1.87 in U.S. benefits for every $1 of government spending when accounting for subsidies that existed prior to the IRA. Under a scenario with no electric vehicle subsidies, however, the IRA policy generated only $1.02 in U.S. benefits per dollar of government spending.

From a tax policy perspective, the payoff has come at a price.

The researchers find that 75% of the EV subsidies claimed under the IRA have gone to consumers who would have bought an electric vehicle anyway. Thus, the scholars estimate that the government spends $32,000 for each additional EV sold.

“This policy is not a home run,” says Hunt Allcott, a senior fellow at the Stanford Institute for Economic Policy Research (SIEPR) and a professor of environmental social sciences at the Stanford Doerr School of Sustainability, who co-authored the study. “While the IRA’s electric vehicle tax credits have slowed climate change and shifted production to U.S. manufacturing firms, they also impose high costs on U.S. taxpayers.”

The researchers suggest that the IRA could have been far more beneficial if it provided larger tax credits to cleaner EVs. The reason is that the environmental costs of driving an electric vehicle vary substantially across EVs. For example, switching from a hybrid Toyota Prius to an electric Tesla Cybertruck supports the adoption of cleaner-energy vehicles, but the Cybertruck generates more pollution.

Identifying trade-offs

Using detailed sales data from dealerships, the research team from Stanford; Duke University; the University of California, Berkeley; and the University of Chicago finds that EV buyers are by far the biggest beneficiaries of the IRA tax credits. Next up on the winner’s list are U.S. car makers, and not just because EV sales have risen: The IRA requires that to be eligible for the tax credit, EVs must be assembled in North America and their main components sourced from the U.S. and its allies.

The researchers find that “ally-shoring,” as the move by governments to strengthen supply chains is often called, has had mixed results.

“These subsidies have benefited U.S. consumers and U.S. firms, and have both helped and hurt U.S. allies,” said Felix Tintelnot, an associate professor of economics at Duke. “U.S. allies have benefited from less climate pollution, but they’ve also lost profits to U.S. vehicle manufacturers.”

The study’s authors reached their conclusions using a unique dataset they compiled that included detailed records on vehicle prices, leases, and purchase decisions in the months before and after specific vehicle models gained and lost eligibility for the IRA subsidies. The researchers also applied a mathematical model of consumers’ decisions about which vehicles to buy and auto manufacturers’ decisions about which vehicles to sell.

“This ‘Buy American’ policy pits trade versus the environment,” says Joseph Shapiro, an associate professor at UC-Berkeley who is currently a visiting scholar at the Stanford Department of Economics in the School of Humanities and Sciences. “The IRA subsidies have advanced vehicle electrification by limiting foreign competition. This is driving ahead on global climate policy but making a U-turn on global trade cooperation.”

The study also analyzes the IRA’s “leasing loophole,” which lets any EV vehicle leases qualify for subsidies, no matter where the vehicle is manufactured. The study finds that this exemption mostly encourages consumers to acquire foreign-made vehicles and claim the tax credit without substantially benefiting the environment.

In addition to Allcott, Tintelnot, and Shapiro, the study co-authors are Reigner Kane and Max Maydanchik, both of the University of Chicago.