California Electric Vehicle Tax Credits

The electric vehicle market is really starting to expand and in the US, various levels of Government are trying to help by providing tax credits to buyers of these cars.

The Federal Government provides up to $7,500 in tax credits to buyers of electric cars, provided they buy from a manufacturer who hasn’t delivered 200,000 units. Tesla are passed that point and Motoring Weekly wrote about that recently. Apparently General Motors is next on the list with reports saying that they are close to delivering their 200,000th electric vehicle.

California has just increased the State Tax Credit to $3,500 to encourage more vehicles to be purchased. Not that they need more – in December there is an expectation that the 500,000th electric vehicle will sold in the State! If you live in California, the only way to get the State Credit is by being registered for either the California Alternate Rates for Energy or the Family Electric Rate Assistance, or by proving you are a low income family – and there is a table to define how the income versus family member equation works. It seems that the credits are mostly directed at people who may not actually be able to afford a car! However the Federal Tax Credit is certainly helping – nearly 10% of all cars sold in the State are now electric.

With Tesla over the threshold of deliveries and General Motors about to reach it, they are both concerned that they will lose sales to imports or other locally produced electric vehicles. So they have teamed up with Nissan, who are not that far behind General Motors in deliveries, to lobby the Federal Government to extend the full Tax Credit for several more years – or at least until every manufacturer reaches the threshold.

California has been at the forefront of emissions controls for decades, to the point of forcing manufacturers to comply which in turn helped everyone. It is this attitude that has upset the current Administration who want to lower the emissions standards rather than increase them. With the recent mid-terms now done and the Democrats retaining the State, it is possible that the State v Federal battle will escalate.

California is considering State Bill AB1184 that would dramatically increase the funding to support the electric vehicle industry. It is worth $3Bn in rebates and subsidies for lower income families, going further than the existing program. Frankly, the more cars produced and tested, the better it will be for all markets globally and the key here is just how much California’s tax payers will accept the cost of getting these cars to market when it benefits a wider market. I don’t like Governments interfering with marketplaces because there is always collateral damage.

If California, via the Democrats, could persuade other States to join (or replicate) their Bill, it would take pressure off the West Coast taxpayers and spread the impact out over a wider area and that would then mean other States picking up more electric vehicle sales. Currently California is streets ahead in that respect.