Free Electric Cars: State Incentives to Drive Green

I reported yesterday that price was one of the "Seven Barriers to the Electric Car." Indeed it is, but some states are trying to reduce the economic hurt by offering consumers electric subsidies - in the form of either tax breaks or straight rebates.

The most generous subsidy to date is probably Oklahoma's, where buyers can get a tax credit worth 50 percent of the purchase price of an electric vehicle (EV). Some savvy consumers combined the state break with an equally useful one from the federal government to buy electric golf carts and relatively low-cost neighborhood electric vehicles (NEVs), which are cars that can't go on the highways. Roger Gaddis, who owns Ada Electric Cars in Oklahoma, did the math on an $8,000 vehicle. "The state credit is 50 percent--that's $4,000," Gaddis said. "The federal credit on that particular car is $4,400, which makes the car free. Is that about the coolest thing you've ever heard?"

It was very cool for Atlanta-based Wheego, which makes NEVs and has sold more than 100 of them (of its 300 to 400 total sales) in Oklahoma. Last September, the state tightened up the requirements somewhat, ruling, "The exclusion includes vehicles that have a body configuration more akin to that of a typical golf cart or go-cart rather than a traditional passenger automobile and vehicles that are principally designed and manufactured for sporting or recreational purposes." Wheego is still safe.

Then there is California's rebate, which went into effect early this week. Customers (even those that don't pay taxes, such as non-profits and government agencies) can get a $5,000 check when buying a standard battery electric car, and as much as $20,000 if they buy electric trucks. The state has allocated $4.1 million for the program.

The state of California is staggering under a $20 billion deficit, and Christopher DeMorro, writing at Gas 2.0, asks, "Are there really enough [electric vehicles] to justify the $4.1 million at a time when many state governments are tightening the fiscal belt?"

That's certainly a good question. Maybe it would help to explain that the cash payments are coming not from California's general fund but from revenue siphoned off of Department of Motor Vehicle registration fees. But it's still state money.

At presstime, the California Center for Sustainable Energy, which is administering the program, said no one had yet applied for the first-come, first-served subsidies, but that may be because so few electric cars are on the market . The $109,000 Tesla Roadster, in fact, is the only roadworthy example on the state's eligibility list.

The $4.1 million fund will be replenished next year, and by then such more modestly priced EVs as the Chevrolet Volt, Coda sedan and Nissan Leaf will be on the market. As Jay Friedland of Plug In America points out, this would enable consumers to buy cars like the Leaf for something like $20,000, taking into account the federal subsidy.

EV advocates, not surprisingly, called for just such state and federal jump-starts at a Senate hearing last month. They point out, reasonably, that EV prices will only come down with high volume, and that government fleets would be a good start. California's subsidy will undoubtedly put electric cars into state and local government motor pools.

Here's a video look at why it could be a good deal to buy a Nissan Leaf in one of America's greenest cities, San Diego: This story wouldn't be complete without a special citation of Colorado's tax credit, which allowed motorists to deduct 85 percent of the difference between the purchase price of their electric car compared to its conventional counterpart. This meant, in practice, that consumers could buy a Tesla Roadster and write off more than $40,000, which is the difference between the Tesla and the Lotus gas car it's based on. That expired at the end of last year, alas.

Here, courtesy of The Car Electric, are some of the more interesting state tax benefits for owning zero emission cars:

• Arizona: A $75 credit for taxpayers installing EV charging at home.
• California: EVs can ride in high-occupancy vehicle (HOV) lanes without meeting occupancy requirements. In Sacramento, there's free parking in city lots.
• Florida: Unrestricted access to HOV lanes.
• Georgia: A tax credit good for 20 percent of the EV's purchase price, or $5,000 (whichever is less).
• Illinois: A tax rebate of up to 80 percent of the vehicle's cost, or $4,000 (whichever is less).
• Kansas: $2,400 tax credit for vehicles up to 10,000 pounds.
• Louisiana: A 20 percent tax credit for electric vehicles.
• Michigan: Exemption from the annual emissions inspection.
• New Jersey: No state sales tax on EVs; access to HOV lanes; and a $4,000 tax rebate).
• Utah: Free metered parking in Salt Lake City, plus access to HOV lanes.