©1998 Shari Prange bureaucrats, and any of it is subject to change without notice. These lists tend to be incomplete, difficult to read and understand, and riddled with obsolete entries. Most incentives are aimed at fleets and commercial users, and many are written for natural gas or other alternative fuels. These won't do John or Jane Q. Evdriver any good. How do you separate the gold from the dross?

Search For Buried Treasure

Don't despair—you don't really need to know about all of the incentives offered throughout the whole country. You only need to know about the ones that apply to you. With a little investigation, you can track these down.

In this article, we will outline the places you should research, and the general kinds of incentives you might find there. We'll move from the largest jurisdictions to the smallest. Like a treasure map, this outline alone won't take you straight to the gold, but if you follow the directions it will lead you there eventually.

Read The Fine Print

This might be a good time to define a couple of terms that will come up repeatedly. One is "tax credit," which is better than a "deduction." A deduction is subtracted from the base number before tax is calculated. The base number is usually the amount of your income. For some kinds of incentives, it might be some other number, such as the assessed value of the vehicle. A credit, on the other hand, is subtracted after the tax is calculated. For example, a $1,000 income tax deduction reduces your taxable income. A $1,000 income tax credit reduces the actual tax you pay.

Another term is "incremental cost." In other words, how much more did the EV cost than a comparable internal combustion vehicle? If you are buying or leasing a vehicle, it might be the difference between a gas Ford Ranger and an electric one. If you are doing a conversion, it would be the cost of the conversion process. Many incentives are defined as a percentage of the incremental cost of the EV.

You should also know that many incentives are onetime only, and must be taken in the year in which the car was placed in service as an electric. Sometimes, if you cannot use up the entire tax credit in one year, you can carry it over to the next year.

Federal Incentives

The good news is that the IRS offers a tax credit for electric vehicles. The bad news is that it applies to purchases but not to conversions. The credit is good for 10% of the cost of the vehicle, up to a maximum of $4,000, and is available to private individuals or businesses.

The law specifically states that the vehicle must never have been in service previously. Some people have taken the position, "Well, it was never in service as an electric before." If you're lucky and no one looks too closely at your return, maybe you'll get away with it. But this is not how the IRS interprets the text, and they do not take kindly to creative interpretations of their regulations. Do yourself a favor, and don't take the chance.

There is a different federal tax break for conversions, but it's not as generous. It allows a business or individual to take a tax deduction (not a credit) of up to $2,000 for the cost of the conversion.

State Incentives

Not all states have incentives. Some, like California and Arizona, are more progressive than others. The place to start is at your state's energy office. The exact title may vary—it may be listed as the Energy Commission, Energy Office, or Department of Energy. It might be inside another department, such as the Department of Commerce.

You might also try the Environmental Protection Department, or even Bureau of Air. Look for an agency involved with energy, air quality, pollution control, or the environment. Your local reference librarian, or your state government's web site on the internet should be able to help you track this down.

State incentives might include income tax breaks, sales tax exemptions, or even grants. For example, the state of Georgia offers a $1,500 tax credit for the purchase, lease, or conversion of an electric vehicle. Illinois offers a cash rebate of 80% of the incremental cost of a new vehicle or a conversion, up to $4,000. In West Virginia, it's a $3,750 tax credit, but in Utah, it's only a $400 tax credit. In Oklahoma, the tax credit is good for 10% of the cost of purchase, or 50% of the cost of conversion.

Grants may apply to a portion of the cost of the vehicle or conversion, or to the cost of installing charging facilities. Pennsylvania offers Alternative Fuel Incentive Grants of 30% of the cost of conversion through the Pennsylvania Department of Environmental Protection.

Another area to explore at the state level is the Motor Vehicle Department. Incentives here include reduced registration fees and, of course, exemption from emissions inspections. Some states, such as Arizona, offer special license plates or stickers that allow electric vehicles to travel in High Occupancy Vehicle (HOV) lanes with a single person in them. Virginia offers free license plates.

(For those fortunate readers who live rurally and have not encountered them, HOV lanes are also known as "carpool" lanes. They are found on crowded multilane highways in urban areas, and are usually marked by some symbol, such as a diamond. During busy commute hours, it is illegal to use these fast lanes with fewer than two or three persons in the car, and fines are steep.)

County & City Incentives

At the local level, you may find a variety of possible incentives, but they are usually not large cash items. Instead, you may find free parking and exemption from bridge tolls.

One source of information is the Clean Cities Program. This is a classic example of "Think Globally, Act Locally." It is a national project of the Department of Energy that encourages cities to develop their own grassroots pollution programs by sharing the experiences of other cities. If your city is part of the network, it will have a Clean Cities Coordinator. This is the office to contact for information on local programs that might benefit you.

To find out if your city is part of this program, see the access section at the end of this article.

Utility Incentives

Utilities are the largest non-governmental bodies actively involved in offering EV incentives. The most common offering is a reduced electricity rate. This is usually tied to a time-of-use program that encourages shifting electrical usage to off-peak demand hours, especially nighttime. This is perfect for EV charging.

San Diego Gas & Electric, for example, offers a rate of $0.07/kWh between 6:00 PM and midnight, and a rate of $0.04/kWh between midnight and 6:00 AM. The standard rate is $0.10/kWh. You do have to sign up for the special time-of-use program to get these rates.

Some utilities also offer assistance with installing charging facilities. In addition, the utility may install public charging facilities in various locations, and may offer the charging free of cost. These are usually designed for the charging connections of major manufacturers, such as GM, Ford, or Honda, and may not accommodate conversions.

Sacramento Municipal Utilities District, Southern California Edison, and Arizona Public Service are very active in promoting EV use.

Pollution Control Districts

Some urban areas have failed to meet federal and state air quality standards. These areas are put under the control of Air Quality Management Districts (AQMD), or Air Pollution Control Districts (APCD), or some agency with a similar title. These can be a source of information and financial assistance.

For example, in California, non-attainment areas are allowed to collect an additional fee of up to $4 per vehicle for all motor vehicle registrations in the area. This money is then used for pollution reduction projects. These could take the form of incentives for private car owners who switch to electric cars, or for business owners who convert parts of their fleets. The money could also fund electric car programs in the schools.

Five of these districts (Bay Area AQMD, Sacramento Municipal AQMD, San Diego APCD, Santa Barbara County APCD, and Ventura County APCD), in conjunction with the California Energy Commission (CEC), have a $5,000 "buy-down" for the purchase or lease of new electric cars. In the case of a leased car, the $5,000 is applied to the theoretical purchase price, which lowers the lease payments. The South Coast AQMD has a similar program of its own, not affiliated with the CEC.

Seek And Ye Shall Find

It seems kind of silly to offer all of these "incentives" for alternative fuels without publicizing them, doesn't it? If a fee falls and no one hears about it, does it make a difference?

No one will come knocking on your door to tell you about EV incentives. There is no magic directory that will tell you everything you need to know about them. But with a little intelligent effort, you can ferret them out. The payoff can make the effort quite worthwhile.

For more information about available electric vehicle incentives and contact information for doing your own research, check out our web page.


Shari Prange, Electro Automotive, POB 1113-HP, Felton, CA 95018-1113 • 831-429-1989 [email protected] Web:

Clean Cities Program • 800-224-8437 Web:


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