End of the Road for GA’s Electric Vehicle Tax Credit?

Posted by Decaturish.com December 9, 2014
2011 Nissan Leaf. Source: Wikimedia Commons

2011 Nissan Leaf. Source: Wikimedia Commons

By Dena Mellick, contributor

It was at a Christmas party three years ago that Decatur resident Brian Hammer first learned about a friend’s electric vehicle and the impressive tax credits that came along with it.

Hammer owned a car that was breaking down often, so he was in the market for a nontraditional mode of transportation to get to his job as a microbiology professor at Georgia Tech.

Within a few weeks of that 2011 Christmas party, Hammer had a lease on a Nissan Leaf.

When he drove his new Leaf to Georgia Tech’s campus in January of 2012, Hammer noticed there was only one other electric car on campus, and he had his pick of electric car parking spaces equipped with charging stations.

These days, the associate professor believes there are more than 100 electric cars on Tech’s campus. And Hammer is still one of them. He just renewed his Leaf lease, and even though he’s driving the same route to work, he said he just feels better about driving in an electric car.

“It’s sort of psychological. When you’re in stop-and-go traffic in a gas-powered car, you’re burning gas the whole time you’re sitting there, which to me just feels horribly wasteful,” said Hammer.

Metro Atlanta has had a surge in electric vehicles in the past few years. It is second only to San Francisco for electric vehicle sales, according to IHS Automotive. And Inside EVs reported that Georgia surpassed Washington this year to become the state with the highest electric vehicle market share.

What’s behind the rapid growth? Incentives appear to be playing a major role.

A report from the International Council on Clean Transportation (ICCT) found electric vehicle incentives are significant sales drivers. The report said, “Some of the states with the largest electric vehicle incentives – California, Georgia, Hawaii, Oregon, and Washington – have electric vehicle sales shares that are approximately 2-4 times the national average.”

The report said incentives like subsidies, carpool lane access, and emissions testing exemptions are most effective.

Hammer said Georgia’s generous tax credits have been a major reason behind his choice to drive an electric vehicle.

The state offers a credit of either 20 percent of the vehicle cost or $5,000 (whichever is less) on zero emission vehicles.

And when Hammer renewed the lease on his Nissan Leaf, he also received dealership incentives for renewing and additional cash back through his employer, Georgia Tech.

“I would be defined I guess as one of these early adopters. If someone tries the new thing early, they can really capitalize on offers out there,” said Hammer.

However, it’s not clear how long those offers will be around.

Alpharetta lawmaker Rep. Chuck Martin introduced a bill during the previous state legislative session that would have killed tax credits for electric vehicles. The bill didn’t make it through, but advocates of the tax credits are gearing up for the possibility of another proposed sunset bill.

Don Francis, Executive Director of Clean Cities-Georgia, said there is no doubt that the tax credit is having an enormous impact on the number of electric vehicles in Georgia.

“One of the reasons we are the second largest market for electric plug-in vehicles in the country is because of the tax credit,” Francis said. “It has generated the interest in the individuals to say, ‘I can take the risk of purchasing a vehicle that’s basically twice the cost of a comparable gasoline vehicle because, over time, I’m going to recoup the benefit of this tax credit, I’m going to recoup the benefit of a much lower cost of fuel, I’m going to recoup the benefit of lower maintenance.’”

Francis said Clean Cities-Georgia has commissioned a Georgia State University economics professor to analyze the impact of the state tax credit and its financial benefit. Once the study is ready, Francis said he wants to sit down with Rep. Martin to show him how the tax credit is actually bringing in money.

“What we need to do is quantify what the number is for Georgia and therefore we can use that to support the continuing expansion of the tax credit,” Francis said. “People say it’s just money flowing out the door, let’s kill it. That’s not necessarily the case. It actually has a cash flow benefit for the state of Georgia, in addition to other societal benefits we’re not even addressing, things like improving air quality.”

Rep. Martin did not respond to Decaturish’s question about whether he intends to reintroduce the bill to end the electric vehicle tax credit in the upcoming legislative session.

For higher end electric vehicles, the tax credit may help, but it may not make a big difference in purchases.

Tesla just opened a showroom and service center in Decatur. Tesla’s Model S starts at $70,000, so a $5,000 potential return is only a drop in the bucket.

Alexis Georgeson, Senior Representative for Tesla Motors, said “it’s an incentive of course, and the tax credit is in place to encourage people to adopt a new technology – that’s the purpose of these credits. I don’t think really it’s make or break. I think people are drawn to the product for other reasons, and the tax credit’s a nice bonus, but I don’t think that’s what’s making their decision to purchase the vehicle.”

The Decatur Tesla showroom is one of three in the metro area; the first location was in Marietta, and a showroom also just opened in Lenox Mall.

“We open up stores and service centers based on where our current customers live and where we believe there will continue to be a strong market for us,” said Georgeson.

Tesla says it plans to invest in Georgia’s car-charging infrastructure – a sign the company sees long-term viability in the state, despite a petition filed against it by the Georgia Automobile Dealers Association. That hearing is set for this week.

For Brian Hammer, the Leaf works for his daily commute, but he said owning an electric vehicle has to be a good fit. “You can’t be a person that has to drive vast distances because the car gets about 80 miles on a charge,” Hammer said.

It’s important to note that individual tax situations vary, so you should contact your tax professional to determine if you qualify for a state or federal electric vehicle tax credit.

Find out what Decaturish learned about Tesla’s highly-anticipated Model X.

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