The State of Colorado just passed legislation granting a $5,000 point-of-sale incentive for the purchase of an electric vehicle in the State, in addition to the existing $7,500 federal tax incentive. That’s $12,500 cut in an attempt make EVs more competitive with traditional car purchases.
The announcement from the Southwest Energy Efficiency Project highlights the simplicity of the new state incentive, making the electric vehicle more attractive and competitive:
On May 4, the Colorado legislature approved HB 1332, a bill that dramatically improves the state’s alternative fuel vehicle tax credits. It simplifies a complex formula, setting a flat $5,000 credit for the purchase of a light duty electric vehicle (EV). Most importantly, it makes the credits assignable to a car dealer or finance company, which will effectively turn them into a point of sale incentive. This makes the Colorado incentive the best in the nation, combining one of the highest tax credits with a point of sale option, and is expected to significantly increase EV sales. SWEEP proposed the concept of assignable tax credits and helped build broad support for the legislation.
The point of sale discount of $5,000 is a big improvement in the process of selling electric vehicles because it allows dealerships to discount the amount directly from the sticker price of the car, making the price more attractive to buyers.
The previous method, and the existing method for the $7,500 federal incentive, require a reimbursement after the sale, meaning you have to front the full cost of the vehicle until the paperwork goes through. Colorado’s new system means you save the cash immediately.
For example, a new Chevy Bolt would be immediately available for around $30,000 from a Colorado dealer, and then once you receive the federal tax incentive, the final price is really only around $22,500. That makes the electric 5-door hatchback actually level with other ICE competitors in its segment.
Hopefully more states pick up similar incentive programs, as marking down the sticker price is more attractive than waiting on a check.