Electric Vehicles: EV Tax Credit and State Regulations

The increasing adoption of electric vehicles in the United States represents a huge change from the gas-powered vehicles that have been a staple for almost a century. The vehicles bring both exciting possibilities and unique challenges. This causes curiosity and sometimes concern about ways these changes affect you, the average consumer. What options do you have? Will electric vehicles become mandated by law? Do you need to begin planning now?

Read on to get the basics and some helpful links to prepare you for the future.

What kind of electric cars are available?

Although electric vehicles are often lumped into a single category, often referred to as EVs, there are several types available:

Battery Electric Vehicles (BEVs) or All Electric Vehicles:

●       Powered by rechargeable batteries, no gasoline engine

●       Battery charged by plug-in to an external power source (recharging equipment)

Plug-in Hybrid-Electric Vehicle (PHEV):

●       Powered by both electric battery and internal combustion (gas-powered) engine

●       Battery charged by plug-in to an external power source; when battery power is used, they run on gas

Hybrid Electric (HEV):

●       Powered by both electric battery and internal combustion (gas-powered) engine

●       Battery charged by regenerative braking – no charging station required

What are the advantages and limitations of EVs?

The increase of electric cars on the road is driven by several factors, but EVs also come with their share of challenges.

Environmental Effects:

Transportation is the largest contributor to greenhouse gas (GHG) emissions in the United States.  Increased zero-emission vehicles could result in a significant reduction in air pollutants, such as GHG. This decrease could impact both environmental and public health.

Concerns still exist over the effects of lithium mining on the environment. The source from which an EV gets its power (i.e.: solar vs nuclear) also has a major impact on the benefits over its lifetime so, benefits may vary by region.

Cost to Consumer:

The initial cost to purchase EVs is often slightly higher. However, there is also potential for significant consumer savings with reduced dependence on fuel. Incentives are also in place to offset some of this cost (see Ways the Government is Promoting EVs below).

Infrastructure Needs:

The distance an EV can travel before needing a charge varies greatly by model. Major

increases in available charging stations, as well as the toll on electric grids, must be considered. Solutions may include increased funding and attention placed on solar power and company incentives to build charging stations.

National Energy Security:

Electric and hybrid vehicles rely, at least in part, on electricity for power. Electricity is manufactured in the United States via natural gas, solar and wind energy, coal, and nuclear power. This represents a more secure energy source, diversifies the transportation industry, and has potential to boost the US economy.

Who regulates electric vehicles in the US?

Standards for fuel economy and vehicle emission can come from multiple places. Currently, the three primary agencies working to set standards include:

• The Environmental Protection Agency (EPA)
• The National Highway Traffic Safety Administration (NHTSA)
• State Boards – California Air Resources Board (CARB)

What is the U.S.  government’s current policy on electric vehicles?

Currently, there are no national mandates in place that require a switch to EVs. Instead, goals are being set for when changes may be complete, and policies have been put in place to assist the process with new developments constantly in consideration.

Ways the government is promoting EVs:

Electric Vehicle Incentives:

●       Federal Electric Vehicle Tax Credit: The EV tax credit is worth up to $7,500 to consumers. It applies to the purchase of new and used electric vehicles.

●       Electric Car Rebates: Point-of-sale rebates exist to reduce cost at purchase and interest, over time. Rebates are also available to offset the cost of charging equipment.

●       Grants: Some states offer grants based on income to aid in the purchase of an EV

●       Utility Discounts: Some states have discounts on electric utilities based on charging needs for EVs.

Focus on Infrastructure:

●       For example, demand on the electric grid will be significantly increased and utility providers will require support to ensure readiness. Installation of widespread charging stations will also be necessary. Recycling programs for lithium batteries require development.

Raising Public Awareness:

●       Examples include public education campaigns on the benefits and options when purchasing EVs, spreading awareness of the incentives above, and government-assisted training for auto manufacturers

What year will all cars become electric? Will gas vehicles be banned?

The short answer is that there are no hard deadlines in place on a national level. Globally, climate talks and initiatives from the European Union have only resulted in setting goals for a complete change to zero-emission vehicles. End dates for this currently range between the years 2035 and 2040.

Nationally, the US talks are slightly more conservative with goals in place for the year 2050 and focus on faster requirements for fleet vehicles, especially in the government. There are many individual states, however, that are moving more quickly, with California leading the charge by choosing to enact its own laws (See What States Are Mandating EVs below).

Gas cars still make up over 90% of the market in the US. There are limitations that must be overcome to reach a reality of a complete change from gas-powered to electric vehicles.  The change will not happen overnight.

What states are mandating electric cars?

According to the National Conference of State Legislatures, as of July 2021, at least 47 states and the District of Columbia offer incentives to support the deployment of EVs or alternative fuel vehicles and supporting infrastructure, either through state legislation or private utility incentives within the state.

California has a zero-emission vehicle mandate, requiring a percentage of cars sold to be emissions-free by 2025. Their automobile emission standards are also more strict than federal standards. At least 13 other states have also adopted California’s low or zero emission standards, including California, Colorado, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Virginia, Vermont, and Washington, with many more states in the process.

Change is coming. Stay informed.

Although a complete change by the US to electric vehicles cannot happen overnight, change is coming. Consumers can stay informed by utilizing the references below, as well as those from individual state government agencies.

Auto industry professionals like those at BraunAbility can help guide consumers in the right direction for their more specific needs, especially in the case of specialized conversion vehicles.