How Clean Energy Incentives Helped Launch an Electric Vehicle Revolution

The allure of having an electric vehicle, that is both green and saves you money, is hard to resist. Sales of electric vehicles in 2018 reflect that consumers have woken up to the benefits of electric cars - with sales increasing dramatically from the year before. Aiding that increase has been a combination of Tax Credits, rebates, and other incentives that have made buying an electric vehicle - and installing solar to power it - within reach of a much larger segment of people. Let’s take a look at how the EV market grew in 2018 - and how incentives helped with that increase.

The Top Selling Electric Cars in 2018

2018 was an amazing year for electric car sales. In the US, EV sales for 2018 came in at 361,307, up 81% from 2017. This sharp increase surprised both EV experts and investors alike, but proved both that the Tax Credits for EV’s are working, and that consumers are enthusiastic for adoption. US car buyers are clearly excited about going green and saving money by switching to electric. 

Between the Model 3, the Model S, and the Model X, Tesla EV sales made up over 50% of total EV sales in 2018. Other big players were the Toyota Prius Prime, the Honda Clarity, as well as the Chevy Volt and Bolt. As these EV’s are becoming both more affordable and more efficient, it’s clear that the price tag is a big determining factor for adoption. Combine those price decreases with the incentives and rebates available - and it’s clear to see why the adoption spiked in 2018.

EV Tax Credits and Rebates as Incentives to Buy

Though there were some EV models released in 2018 that had significantly reduced price tags from the years before, and that likely contributed to the increase in sales, we still cannot ignore the fact that in 2018 there were substantial Tax Credits and rebates on EV’s that aided in sales as well. Between the Federal EV Tax Credit and the California Clean Vehicle Rebate Project, there was plenty of money available to those who purchased an EV in 2018. To ignore those savings was clearly too hard for many people who were on the fence about buying, as the numbers show. Let’s look at some of those credits and rebates to see just how convincing they were. 

The Federal EV Tax Credit 

A large part of the reason EV’s sold so well last year is that there were significant Federal Tax Credits available to buyers. The way the Federal EV Tax Credit works is that any plug-in or hybrid electric cars purchased after 2010 are eligible for a Tax Credit of up to $7,500. The credit amount is determined by the capacity of the battery of the vehicle, as well as how many have sold. To find out how much is available for each model, you can visit the official FuelEconomy.gov website.

Tax Credit Phase Out’s Per Model

Most EV models start with a potential $2,500 to $7,500 credit, then once the manufacturer reaches 200,000 models sold, the credits’ for models from that manufacturer have a phase out period where the amount of credit is halved every financial quarter, following the limit being reached. So for example General Motors, maker of the popular Chevy Bolt and Volt, reached its 200,000 sales mark in Q4 of 2018. So in 2019, the Tax Credit available for GM electric vehicles has been reducing each quarter, from $7,500 in the first, to $3,750 this quarter, and will go down to $1,875 starting on 9/30/2019 - until it completely phases out on 3/31/2020.

So, if you’re looking to purchase an electric vehicle, you should know when the Tax Credits phase out for your desired model so that you can get the maximum amount of credit. For many models, there is no end date planned yet because the manufacturer has not yet reached 200,000 sales; but for the popular manufacturers - including Chevy and Tesla -- Tax Credits are already halfway gone. So, it’s best to stay informed on phaseouts to save the most money possible.

How To Claim the EV Tax Credit

Claiming the EV Tax Credit is easy, and you don’t need to be a tax expert to do it. All it takes is filling out IRS Form 8396, the Qualified Plug-in Electric Drive Motor Vehicle Credit. For those that purchased an electric vehicle for personal use, you report the credit from Form 8396 on the correct line on the IRS Form 1040. If you do work with a tax professional, just let them know about your EV purchase and they should be able to walk you through it.

The California Clean Vehicle Rebate Project

Another factor that likely contributed to the increase in EV adoption and sales in 2018 was the California Clean Vehicle Rebate Project (CVRP). The CVRP is a government funded program in California that promotes electric vehicle adoption by providing rebates of up to $7,000 for the purchase or lease of zero emissions vehicles. The amount that car buyers’ can receive in rebates is based on the model of car, the buyers’ annual income, and tax status. 

For most EV’s, the maximum rebate they can receive is $2500, and that is only for those in the lowest income bracket. That said, even lower rebates for higher earners were clearly enough incentive to boost sales. If you look at the number of rebates claimed, there was a significant jump in 2018, especially in the Summer.

In 2018, there were a total of 73,329 rebates issued through the CVRP, which include rebates given out for hybrids, full-battery run, non-highway EV’s, and fuel-cell EV’s. That’s a dollar amount of $173,358,752. That is up significantly from the 47,758 rebates issued in 2017, at a dollar amount of $114,804,750. Clearly consumers are trying to get what’s left of the Federal EV Tax Credit, as well as take advantage of the $2500 CVRP that is still available for this extremely popular EV.

The EV + Solar Connection

For electric vehicle owners, it makes sense to install solar to offset their EV charge. To be able to power your EV with solar is to achieve the highest level of green living - not only are you creating your own power from the Sun, but you are no longer purchasing fossil fuels and supporting that industry. The other obvious benefit is that it can save you a ton of money, as you no longer pay for power, or gas - which for some people who have long commutes, can really reduce expenses. 

While not every EV owner has solar, there is a clear correlation between owning an EV and installing solar. According to a survey by Clean Technica, only 13% of non-EV drivers have solar, which is 15% less than EV drivers at 28%. So by this you can infer that almost ⅓ of people who are buying electric vehicles are also buying solar to offset their electric vehicle charging.

The question that remains here is whether these EV owners, who we know are more likely to install solar, are installing solar to offset their EV usage, or if they are buying an EV because they have solar. There’s no way we can know, but what we can infer, with the correlation between incentives, tax credits, and EV sales, that these consumers are at least partly driven by these Tax Credits and rebates. It would make sense then that along with buying the EV due to incentives, that they probably bought solar to get the incentives available for that as well. For the truly savvy consumer, getting the EV and solar in 2018 would allow them to stack incentives on each item which equals out to a huge amount of savings. So let’s look at the incentives for solar that are still available, to see if that likely had an influence on these consumers.

The Federal Solar Tax Credit

The biggest incentive for installing solar is the 30% Federal Solar Tax Credit, which gives homeowners who purchase solar an income tax credit worth 30% of the cost of their solar installation. The astronomical rise of solar in the last 10 years has been largely credited to the Federal Tax Credit, as it has made solar power affordable for a much larger percentage of homeowners. Much like the Tax Credit we have discussed for EV’s, the Solar Tax Credit has a phase out period before it completely goes away. It just so happens that 2019 is the last year of the full 30% credit - after this year it goes down 4% for two consecutive years - then goes away completely.  So for those EV owners who are looking to install, 2019 is the last year to get the Full Credit.

2019 is the Last Year to Stack Incentives

So if you’re looking to buy an electric car and you’re looking to install solar to offset it’s charge, 2019 is the last year for you to save the most money on your purchase with incentives. Let’s go over what is still available in 2019:

$7,500 - $1,850 Federal EV Tax Credit (depending on the model)

$2,500 California Clean Vehicle Rebate project (for those that qualify)

30% Federal Solar Tax Credit

Like we have said, the 30% Federal Tax Credit is phasing out after this year, and for some models, like the Tesla Model 3, the Federal EV Tax Credit will be phasing out after this year. So by buying an EVE and going solar in 2019, you will maximize your savings. If you wait, you will be leaving money on the table, not only in incentives, but all the money you could be saving on gas and your power bills.

So, as you can see, clean energy incentives, both for electric vehicles and solar installation, have jump started an electric vehicle revolution. The combination of incentives for both electric vehicles and solar continue to open up electric vehicle ownership to a larger demographic. The good news is that there is still time to get in on these amazing savings, but only for the rest of the year - so don’t miss out.