Are there good incentives available for EVs?
Yes! As state and federal governments want to encourage the switch to electric cars, there are a variety of incentives available to car buyers. These incentives significantly changed with the recent passage of the Inflation Reduction Act. The Federal tax credit can still be up to $7,500, but there are new criteria that auto manufacturers need to meet in order for their EVs to apply.
The $7,500 Federal tax credit is broken up into two halves:
- The first $3,750 is applicable for vehicles whose “final assembly” takes place in North America. Only a handful of EV’s currently comply with that requirement, but many manufacturers are already in the process of opening new North American facilities.
- The second $3,750 is available based on the source location for the minerals used in the electric battery. The incentive is only available for specific US trade partners and is not available for minerals from specific “foreign entities of concern.”
What you may notice is that this criteria is not fixed. It will change over time as auto manufacturers shift their operations to comply with these incentives. It will be important to do your research before buying a car to make sure your EV is applicable for these incentives.
In addition to the Federal EV incentive, many states also have an incentive available based on income bracket. Lastly, many utility companies offer an additional incentive available to ratepayers. So there are significant savings available to help get people into an EV. As an example, your writer (hello!) saved over $15,000 off the MSRP when getting into a brand new Nissan Leaf at the end of 2019. With all of these incentives, the payment plan for this car was one of the best deals around. But these incentives won’t be around forever, so now is a good time to take advantage of them while they’re here. (Plug-in America has a great map to show all the available incentives).