EV Tax Incentives Drive Electric Car Adoption

MOXIE has pages of info about solar tax credits and incentives for solar panel installations. There’s a pretty nice federal tax credit (26%) running through 2022 for solar panels and batteries. Like solar installs, there are also incentives for purchasing an electric vehicle (EV). Today, let’s go over EV tax incentives and credits for electric cars and plug-in hybrids.

First, a few caveats. These are some of the most important things to know about EV tax incentives and credits:

  • Credits are based on battery size. Cars with smaller batteries only qualify for part of the credit. Many plug-in hybrids fall in this category.
  • Standard hybrids (that charge while driving) are not eligible for the credit.
  • Used cars don’t qualify for the federal credit. (But some states have money for used EV purchases.)
  • If you’re leasing, the credit goes to the manufacturer. However, most sellers factor the credit into the lease, so you will indirectly benefit.
  • Shopping for a Tesla or GM car? Neither manufacturer qualifies for the full credit anymore. This is because they sold too many cars. Good for them! Luckily, there are many other EV options on the market. Good for the rest of us! The federal credit is capped after the automaker sells 200,000 plug-in cars. The credit is capped by total auto sales, not brand or model.

Not a Rebate

Remember, the federal tax credit for EVs is not a rebate. There’s also a federal incentive, up to $1,000, for installing an EV charger.

Claim the federal EV credit on taxes to lower your tax liability for the year of purchase. (One way to create tax liability is to transfer money from a traditional IRA to a Roth IRA. Use the EV credit against your tax burden. Alternatively, you can withdraw money from a traditional IRA.)

The US Dept. of Energy’s Office of Energy Efficiency and Renewables maintains a database of EV incentives. The list includes federal and state level incentives. The list also includes rebates, exemptions, tax incentives, and grants.

EV state incentives

Not every state has an EV or plug-in hybrid incentive. In a few cases, EV owners must pay higher fees to offset lost revenues from gas taxes.

No incentives exist for EV owners in Alaska, North Dakota, South Dakota, Kansas or West Virginia.

But in some places, there are benefits available exclusively to EV drivers. These include access to carpool lanes or discounted parking rates. A few states offer bonuses for low-income buyers or have tax incentives for used car purchases. Some utilities, like ComEd, MidAmerican, and Alliant Energy, offer rebates for EV purchases or installing chargers at home.

In Illinois, EV owners can claim reduced insurance rates.

Future of EV Adoption

Light-duty, plug-in EV sales in the US dipped in 2020, down about 10% from 2019. That drop followed a record year in 2018, when 361,000 EVs sold.

2018 was a big year largely because Tesla’s Model 3 rolled out. Some analysts blame the phase-out of the federal EV credit for the decline trend.

Several other factors hinder EV adoption:

  • Uncertainty about the tax credit is being blamed for some of the slumping sales.
  • State tax incentives are literally all over the map.
  • Mindset. Early adopters charged up quickly but EV sellers haven’t convinced fossil-fuel gassers.
  • Supply. There are waiting lists for some new EVs.
  • Doubts about the drive. Lingering concerns remain about how to get from point A to point B. EV charging stations are still being built. Some cars have digital trip planners to chart a charging map course. But not all cars can use the same charging station. About 20% of EV charging stations are dedicated to Tesla cars. It’s a little like pulling into a gas station and finding only diesel fuel pumps, when you need unleaded.

For pure electric vehicles (not hybrids), the battery pack represents 30-40% of the total cost. That’s a very significant portion of the price tag and the cost is not likely to drop soon.

In urban areas, charging stations are plentiful with more in the works. But driving across less populated areas stretches the limit of some batteries.

EV incentives and charging stations

In some places, the lack of fast-chargers means more time to “fill up the tank” on an EV.

What else is holding EVs back?

For some, the low environmental impact of EVs isn’t enough of a selling point. While the clean energy benefits to the planet are obvious to most, some people cling to their gas-guzzlers. Is it tradition/nostalgia or ideology?

Rivian’s highly anticipated electric pickup trucks and SUVs, the Hummer EV, or Tesla Cybertruck may convert some. International EV manufacturers are planting flags on US soil, including Rock Hill, SC. (Contact MOXIE’s solar office in Rock Hill.)

In 2021, the London-based EV truck maker, Arrival, started operations in South Carolina. Their Rock Hill “microfactory” produces electric buses. Founded in 2015, Arrival has offices in Germany, Russia, Israel, Netherlands, and Luxembourg.

In domestic EV truck news, a flurry of truck manufacturers scramble to get a foothold in the growing market. Companies like Rivian, Lordstown, Hyliion, and Lightning eMotors are now “public”. In some cases, they’ve merged with SPACs for “blank check” fundraising.

But the burden today is on government policymakers, utilities, and auto sellers to create a bull market for EVs. They must set the stage for new charging stations. A confluence of factors will foster rapid adoption of clean cars.

Charging Station Updates

According to estimates from EVgo, a job is created with every new fast-charging station. (EVgo runs public EV charging stations across the US.) This means a government plan to install a half million chargers might create 500,000 new jobs.

An electric highway plan announced in early March 2021 will offer EV drivers more convenient charging options across power company territories.

Electric highway map

The proposed EV charging network from Texas to Florida, Virginia, and Indiana closes gaps for EV drivers. Six large utilities form the charging system coalition: American Electric Power, Dominion, Duke, Entergy, Southern Co., and the TVA.

Last week, the EV charging company, ChargePoint, announced its reverse merger with Switchback Energy Acquisition, a “Special Purpose Acquisition Company” (SPAC). The deal allows investors to purchase ChargePoint stock under the ticker symbol “CHPT” (NYSE:CHPT).

ChargePoint was founded in 2007 and operates more than 115,000 charging ports globally. CHPT aims to increase that to 2.5 million by 2025. The company operates in North America and Europe.

Blockchain Web for EV Charging

In March 2021, Volkswagen’s research department announced a pilot partnership with Energy Web to integrate EVs and charging infrastructure. Energy Web’s open-source tech will be overlaid with Electrify America’s charging network infrastructure.

The partnership is planned as a proof of concept to connect EVs with EV supply equipment with blockchain. Energy Web COO Jesse Morris said the system will integrate EVs into an energy system locally. “Customers can be paid for their EVs to help balance the grid in near real-time,” he said.

The program rewards drivers, fleet owners, and charging station companies who charge during non-peak price hours. The setup will seamlessly integrate EVs with favorable pricing in response to grid load and conditions.

Blockchain technology is useful because it secures identities digitally, like an encrypted and immediate handshake. Nonprofit Energy Web is uses open-source tech to aid energy transition.

More EV News (+ ZEVs)

Joining several other automakers, Volvo announced plans to go all electric by 2030. Their CTO said internal combustion engines have “no long-term future.”

Volvo has two EVs in their lineup, the new C40 Recharge is a compact version of their SUV-sized XC40. The CC40 will only be available for online buyers. Both cars have a range of over 200 miles with a 78 kWh battery pack.


You know EV (electric vehicle), what about ZEV?

ZEV stands for zero-emission vehicle. Companies like FedEx, Facebook, and Anheuser-Busch are promising or implementing ZEV fleets for deliveries and transport.

In the beer delivery industry, Anheuser-Busch has set a goal of making its truck fleet into ZEVs by 2025. About 10% of the beer brewer’s carbon emissions come from trucking. The brewing giant made its first ZE delivery in 2019.

To reach this ambitious goal, they placed orders for 800 Nikola Motor hydrogen-powered fuel cell trucks and 40 Tesla Semis. Anheuser-Busch is the maker of Budweiser, Stella Artois, Michelob, and many more adult beverages.

In California, the city of Santa Monica launched a zero emissions delivery zone with partners Nissan and Ikea. The concept is designed to meet targets in the Zero Emissions 2028 Roadmap. Los Angeles will host the 2028 Olympic and Paralympic Games.

Are these enough incentives for you to try an EV?

We began with an overview of EV tax incentives. The we ran through recent EV developments, ZEVs, and the charging station landscape.

Now, it’s time to plug MOXIE and what we do. Are you interested in learning more about electric cars?

Contact VERV Auto to set up a test drive. VERV is MOXIE’s sister company and specializes in helping customers drive and thrive in a pre-owned EV.

Already have an EV? Do you need an EV charger installed at home? We can do that too, including Level 2 chargers (240 volts).

What about battery storage? In addition to solar panel installation, MOXIE is a certified installer of Tesla Powerwall and Generac battery systems.

Learn more about electric travel and delivery in our “Flying Cars” blog about the future and history of EVs.

Finally, join the discussion on our Facebook, LinkedIn, and Twitter pages.

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