The analysis conducted for this report is centered around identifying relationships between electric vehicle (EV) model price and CVRP applicant federal poverty level (FPL). The goal was to examine and test the relationships and trends, or lack thereof, between these variables to explore how the FPL of applicants may influence vehicle choices within CVRP and the EV market in general. CVRP participation data was used to identify what types of makes, models and price ranges are typically bought or leased by various FPL groups. For this analysis, only applications from January 1st, 2021, until March 19th, 2022, were considered to look at the most recent trends and applicant purchasing behavior. Federal poverty level (FPL) rather than participant income was also chosen for the analysis because FPL determines applicant eligibility to receive the Increased Rebate and considers the applicant's household size and household income, not just their individual income level.
Before conducting the analysis for this report, a stronger relationship between applicant FPL and vehicle purchase price was expected. However, when linear regression was performed on applicant FPL and vehicle purchase price, there was either a negligible relationship or none at all depending on the FPL group. This shows that applicant FPL cannot be a great indication of the vehicle purchase price. Upon completing the analysis, it became clear that applicant FPL cannot be as indicative for the vehicle purchase price, make or model as one would think. Main findings discussed in this report include:
- While there were statistically significant differences between the average vehicle purchase price and applicant FPL group, there was not a strong linear relationship between the two variables, even when broken down by FPL groups, the vehicle makes and vehicle models.
- When looking at averages aggregated into groups above and below 400% FPL, applicants who were below 400% of the FPL, and therefore receiving an Increased Rebate, did purchase vehicles that were lower in price than applicants receiving a Standard Rebate.
- The average vehicle purchase price of applicants who received an Increased Rebate was only 7% lower compared to Standard Rebate applicants, and their FPL was 68% lower. This finding shows that EV purchase prices take up a significant portion of Increased Rebate applicants' income, thus being less affordable. The average purchase price for Increased Rebate vehicles was $44.7k, and $48.1k for Standard Rebate vehicles. Excluding all Tesla vehicles did yield different and lower values.
In previous work done by CSE pre-COVID, CSE found similar results: the linear relationship between applicant FPL and vehicle purchase price was weak or negligible.1 It is somewhat surprising that the relationship between FPL and vehicle purchase price is not more consistent and that many lower-income applicants purchase higher-priced vehicles. This could partly be because there are base MSRP caps, thus excluding any high price vehicles that could strengthen the relationship between income and vehicle purchase price.
Moving forward with program design, forecasting or marketing, it is important to know that there is not a strong or significant linear relationship between applicant FPL and vehicle purchase price. The relationship between those two variables cannot be assumed when thinking about past, present or future CVRP applications. While this may seem counterintuitive, this is what data has shown, and the assumption that applicants with higher FPL status will purchase more expensive cars cannot be supported fully. A future analysis could be valuable as the EV market continues evolving to evaluate if additional product availability changes purchasing habits.