Sticker shock is a malady that’s been plaguing new car buyers for decades. Just when you’ve fallen in love with that model on the showroom floor…WHAM! There’s a number on the window that looks like the gross national product of a small country.
One sure cure for sticker shock is the purchase of a new electric vehicle, or EV. Generous federal, state and local incentives – coupled with offers by some utilities, employers and insurance companies – help bring down the initial cost of both All-Electric Vehicles, or AEVs also referred to as Battery Electric Vehicles (powered solely by electricity) or Plug-In Electric Hybrids, or PHEVs, which back up their battery systems with a gasoline-powered engine. Here’s a summary of available rebates and incentives:
- Federal Tax Credit: The most valuable incentive for buying a new EV is a Federal tax credit of up to $7,500. The size of the credit depends on the vehicle’s battery capacity. Additionally, buyers of popular makes like Tesla and Chevrolet receive smaller tax credits than buyers of less-popular makes because the government phases out the credit for manufacturers that have sold more than 200,000 EVs.
- State incentives: The U.S. Department of Energy has compiled a state-by-state list. In California, for example, the state’s Clean Vehicle Rebate Project offers residents who buy or lease a new EV a rebate of up to $4,000. The rebate is $2,000 for AEVs and $1,000 for PHEVs, with low-income buyers eligible for an additional $2,000.
- Local incentives: Some local governments encourage EV ownership by offering incentives in addition to those provided by the state. These include the Monterey Bay Air Resources District’s Electric Vehicle Incentive Program that provides a $1,000 rebate to buyers of new AEVs and $500 to buyers of new PHEVs. In California, you can find local incentives by entering your zip code on the Drive Clean website.
- Utility incentives: Pacific Gas & Electric offers an $800 clean fuel rebate to customers who purchase a new EV while residential customers of Southern California Edison can collect a rebate of up to $1,000. Check the state-by-state list to find out if your local utility offers EV incentives.
- Employer incentives: A number of companies, including Bank of America, Google and AT&T, provide rebates, free charging or preferred parking to their employees who buy EVs.
- Insurance discounts: In California, both Farmers Insurance and Travelers Insurance provide a 10% discount on auto insurance premiums. These discounts may not be available in all states.
These incentives will help bring down the initial cost of your new electric vehicle, but you’ll also be saving money every time you drive it. The U.S. Department of Energy estimates that using electricity to power your car is the equivalent of buying gas at $1.21 per gallon.
When all is said and done, EVs aren’t just good for the environment – they’re good for your wallet, too.