Obama Budget Would Bump Electric Vehicle Incentive to $10K

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We know there are several obstacles to mainstream electric vehicle adoption in the United States. What if cost were no longer one of them?

A proposal in President Obama’s 2016 budget aims to answer that question with a concrete change in policy to spur purchases of pure EVs and plug-in hybrids. According to The Detroit News, Obama’s budget includes a measure that would bump electric vehicle purchase incentives to $10,000 at the point of sale. In a state like Georgia, where additional incentives are available, it would allow consumers to drive home in a Nissan Leaf for $14,860, destination charges included.

Amount and delivery of rebate would change

The budget proposal Obama submitted to Congress for 2016 included several measures for lowering emissions from transportation and energy production. Rather than the $7,500 rebate that buyers of qualified plug-in vehicles get back after filing taxes, the president’s system would give consumers an instant rebate when making the purchase and increase the amount to $10,000 before state and local incentives. Other elements of the proposal include incentives for vehicles powered by compressed natural gas (CNG).

Obama previously proposed to push the federal incentive to $10,000 in 2013 but failed to find support for his plan in Congress. In a year when the administration will see its goal of 1 million electric vehicles sold fall well short of the mark, Obama is clearly trying to spur adoption of EVs in the mainstream. Removing the obstacle of affordability would address a major obstacle facing the industry at present and could boost sales by a wide margin in single-family home communities.

Source: Nissan

Taking cost off the table

Automakers have discussed taking range out of the equation as a way to change the landscape in electric vehicle adoption. While that would certainly help the cause and lead to a higher volume of sales, the technology does not exist for mainstream consumers. (Tesla’s Model S, with its world-leading range more than 200 miles, starts at $71,070). Charging infrastructure would also take time to develop and plan appropriately.

In effect, the only thing the federal government can do instantly to increase the number of EVs on the road is to increase the amount of available incentives. Georgia, which offers a 20% tax credit with a maximum $5,000 toward the purchase of EVs, is just one state offering additional incentives to green car buyers. California ($2,500), Pennsylvania ($3,500), and Colorado (up to $6,000) also provide tax credits that make these vehicles more affordable.

Communities where single-family homes dominate the housing landscape would likely see the biggest increase in electric vehicle adoption should Obama’s proposal be accepted. The lack of private garages in big cities would stand in the way of many consumers (an extra $2,500 could push some consumers to pay for a local garage).

Yet there is a large segment of the population that lives in single-family homes, and Georgia residents prove this demographic is willing to buy green vehicles if they are affordable. With one of the most attractive incentives in the nation, Georgia posted the highest rate of EV adoption in the first half of 2014.