Abstract
Using transaction level bank data, we exploit the introduction of a subsidized green car loan program and random lottery windfalls as natural experiments to identify the impacts of electric vehicle (EV) adoption via green loans on household spending behavior and finances. We show that households financing EV purchases with green loans reduce gasoline expenditures by roughly 30% on average, increase electricity bills by only 13%, and achieve net monthly savings of $60 in vehicle energy costs. We also find that the subsidized green car loan program significantly increased EV purchases among households previously owning gasoline vehicles, effectively accelerating the replacement of internal-combustion-engine cars with EVs. Random lottery wins provide further evidence that relaxing liquidity constraints drives green adoption: winning a cash prize raises EV purchases via green loans by 10-13 percentage points, even among consumers without prior environmental leanings or financial advantages. Our findings highlight that preferential green credit can deliver both climate and financial benefits while underscoring the role of liquidity constraints in sustainable adoption.