Washington Expands Electric Vehicle Incentive Program, Discounts Up To $3,100

1 year ago by Jay Cole 33

Washington Plug-In Sales By County (through December 2015)

Washington Plug-In Sales By County (through December 2015)

Washington expands its EV tax rebate program, augmenting the existing $7,500 federal tax credit incentive program even further for plug-in vehicles.

Chevrolet Volt Premier Edition Just Got Cheaper In Washington* (provided you purchase)

Chevrolet Volt PremJust Got Cheaper In Washington* (provided you purchase)

With the signing of HB2778 by Gov. Jay Inslee, Washington EV owners can now receive up to an additional $3,100 in instant rebates (via paying no state or local tax on the first $32,000 spent on a new plug-in purchase); that is, provided the new purchase is an all-electric vehicle, or (as just added) a PHEV with at least 30 miles of electric range.

We will note that with the incentive structure as it is framed, the full $3,100 rebate can only be fully realized via a new purchase, up to about ~$2,000 over the course of a lease.

Given the state’s already strong adoption of plug-in technology (see above sales graph by county), the EV market is only going to get hotter.

The only curious caveat to the program, is that it doesn’t start until July 1st, 2016…so you can pretty much write off any EV sales (with starting MSRPs between $35,000 and $42,500) in Washington over the next ~10 weeks or so.

JJ McCoy, Legislative Director for the Seattle Electric Vehicle Association was nice enough to send us a heads-up and also filed this comprehensive report:

“This bill will help get more Washington residents behind the wheel of a great EV,” said JJ McCoy, “Several exciting mid-market cars with 200 miles of range will be in showrooms soon, and Washington’s incentive will give them a boost.”

The Chevrolet Bolt EV (shown here from NYIAS 2016) Will Benefit Greatly From New Washington Incentive Program

The Chevrolet Bolt EV (shown here from NYIAS 2016) Will Benefit Greatly From New Washington Incentive Program

HB 2778 enacts a much needed fix to Washington’s (EV) sales tax exemption, providing up to about $3,100 off the purchase or lease of a new car. Together with federal incentives, this can lower the cost of a non-polluting EV by over $10,000. Prior law capped the program at a $35,000 purchase price. The new law raises that cap to $42,500, which will include the Chevy Bolt, the next gen Nissan Leaf, and the Tesla Model 3 – all with 200 miles of electric range.

“Electric vehicles have a host of benefits – lower carbon emissions, lower fueling costs, better air quality – but they still cost more to make than an equivalent gas car,” McCoy said. “As car makers scale up battery production and prices fall, EVs will soon be able to compete unsubsidized and provide a compelling value proposition. Fueling up costs just $0.85 a ‘gallon’ on Washington electricity rates, so once you have the car, you’re saving money with every mile.”

“They’re also just a lot of fun to drive. We find that once people try an EV, they never they never want to go back to their gas car.”

Here are some facts on the program as given by SEVA:

FAQ –Frequently Asked Questions about the Clean Fuel Vehicle Sales Tax Exemption

How much is this tax break worth?

Up to about $3,100.  Combined with the $7,500 federal income tax credit for an electric vehicle (EV) purchase, that takes over $10,500 off the price of your next EV!  The new law exempts the first $32,000 of vehicle sales price from state and local sales tax.  Total tax rates for motor vehicle sales vary by local jurisdiction but top out at 9.8%.  For more on state + local sales and use tax rates in your area, see PDF here.

Which cars qualify?

The list of cars includes many exciting mid-market cars with 200 miles range that will be in showrooms very soon.

The Tesla Model 3 "May" Arrive In Time To Take Advantage Of Washington's New EV Incentive Program

The Tesla Model 3 Now Qualifies For The New Washington EV Rebate Program, But Likely Will Find That The 7,500 Purchase Cap Has Been Tripped By The Time It Arrives

*-Nissan Leaf*
*-Chevy Bolt*
*-Chevy Volt
*-Mitsubishi i-MiEV
*-BMW i3
*-Tesla Model 3*
*-Ford Focus Electric
*-Kia Soul Electric
*-Volkswagen e-Golf
*-Smart ForTwo Electric

*Soon to feature 200-mile electric range

To qualify, a car must be electrically powered or a plug-in hybrid with at least 30 miles of electric range and have a base model MSRP under $42,500.

Does this tax break apply for re-sales of an EV?

No.  It only applies to the first sale.  However, due to aggressive depreciation, many used EVs are already quite affordable without a tax break.  Used Nissan Leafs coming off leases routinely sell for $12,000 -$16,000.  For many examples, see here (Seattle Craigslist).

Do leased cars qualify?

Yes.  A leased car is exempt from sales tax on any down payment and monthly payments you make.  And leasing companies often factor in the $7,500 tax credit they get in the lease terms.  This could easily save you $2000 over the course

A Limited Number Of PHEVs Are Eligible (such as the BMW i3)For The Tax Rebate

A Limited Number Of PHEVs Are Eligible (such as the BMW i3) For The Tax Rebate

Do plug-in hybrid cars qualify?

Some do.  Cars must have all-electric range of 30 miles or more under state law to qualify.  This currently includes Chevy Volt and may include future plug-in hybrids if they have bigger batteries.

What do I have to do to claim the exemption?

Nothing at all.  Your car dealer will include the tax break as part of your sale or lease paperwork.

When does the program end?

The earlier of July 1, 2019, or one month after Washington sells 7,500 EVs that qualify for the exemption.  We appear likely to reach this cutoff in early 2018, depending on the pace of auto sales.

Why do we have incentives for electric cars?

Electric vehicles have a variety of benefits for the environment and consumers, but the industry needs a boost to scale up manufacturing and brings costs down.  EVs currently cost $10,000 – $12,000 more than their conventional gas counterparts, and they have more limited range.  That situation is changing, as battery prices fall rapidly and the battery capacity gets larger for the same price, weight and volume.  So the state and federal incentives are temporary.  They help consumers get over the upfront cost of the vehicle so they can enjoy the fuel cost savings – about $0.85 / “gallon” equivalent on Washington electricity rates.  And we can help the climate with much lower carbon emissions and our air quality with no tailpipe emissions of ozone, nitrogen oxides or particulates, which can impact human health.

Isn’t this a tax break for rich people?

EVs with 200-mile range and low fueling costs are rapidly entering the mid-market segment of car sales.  With the exciting debut of the next-generation Nissan Leaf, the Chevy Bolt, and the Tesla Model 3, driving electric will be affordable to more and more Washington households.  It’s true that upper-income households have been well represented among the early adopters, but this was true of the hybrid cars like the Toyota Prius a decade ago as well.  And now, legions of cab and Uber drivers – working class to be sure – choose the Prius, since it’s a reliable workhorse, remarkably efficient, and a compelling total cost of ownership proposition.  EVs will make the same transition in the coming years and be a great value for all households.

Our thanks to JJ and the Seattle EVA!

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33 responses to "Washington Expands Electric Vehicle Incentive Program, Discounts Up To $3,100"

  1. Ambulator says:

    The 30 mile minimum sounds like a good idea. Others should copy that idea.

    1. Kaleb says:

      For sure.

    2. Speculawyer says:

      +1000

      You need to make these programs operate in a manner that causes the people to actually plug-in the cars and get a good number of miles on electricity. If they are just claiming the tax-credit and driving in the carpool lanes, that doesn’t help.

      1. Stephen D says:

        No car pool lane perks in WA

    3. jdbob says:

      Suggested by GM I wonder?

      So if your commute is only 10 miles and any number of 20 mile EV range PHEV’s would work, you need to buy one with capacity than you need to get the rebate.

      1. Rob Stark says:

        Volt 53 mile AER
        Pacifica Hybrid 30 mile AER.

        All import PHEVs are less.

        Doesn’t sound like GM number.

      2. ModernMarvelFan says:

        GM would have suggested 50 miles instead…

        Sounds more like a FCA suggestion of its upcoming Pacifica PHEV with 30 miles of range…

        Maybe next version of Ford Energi cars?

    4. Heisenberghtbacktotheroots says:

      +1000

  2. Matt says:

    I’ll be happy to put Clallam County into triple digit territory when I pick up my Model S next month (provided it hasn’t already happened in the few months following DEC 2015)!

    1. Vexar says:

      Ah, sadly not available for any Tesla on sale today. This was carefully designed to exclude the Tesla Model X, Model S, and perhaps others. MSRP cap. I smell General Motors!

      1. JJ McCoy says:

        The price cap was lawmakers’ idea, and $42,500 was the best we could get after 2 tries. Many Republicans and Democrats are reluctant to provide tax breaks for luxury cars. The industry, SEVA, some lawmakers and the Governor all supported a version of the bill that would have included the first $35,000 or $45,000 of every car, but that’s not where our allies among the lawmakers were able to find the vote.

        1. Stephen D says:

          Thanks JJ for your work. I thought we were stuck with the $35k cap. This was a surprise. Will now include most Volts and Bolts.
          Was there any change in $150 annual tab?
          I have a 2014 Volt that I had to pay sales tax on but now also have EV tab.

  3. Tomas says:

    I didn’t realize the credit would phase out after 7,500 vehicles. With a huge surge of Model 3’s arriving in 2018 it seems like you’ll have to be in the first wave to qualify.

  4. Ocean Railroader says:

    This might kind sound of bad coming from the mouth of someone who likes EV’s. But I kind of think with the 200 mile range EV’s coming out and with a lot of these EV’s being $40,000 dollars. I think the tax money spent on this program would be better spent on quick charger construction or in buying fully electric buses for public transit instead.

    1. sven says:

      Good idea.

  5. SparkEV says:

    Poor SparkEV, excluded from this “EV” subsidy…

    1. Jay Cole says:

      No Spark EV available to be bought in Washington…no taxes paid, no taxes to return.

      1. Nate says:

        Vancouver(WA)-Portland dealers are in the same market and compete for buyers in adds. You pay sales tax if registered in WA and not OR regardless of which side of the Columbia River you find your car on. I would bet you could qualify with a Spark EV or 500e registered WA regardless. But, I suppose anything is possible. Just check with WA state before you sign and take delivery.

        1. Nate says:

          Likewise, a Portland OR resident buying a Leaf at Alen Webb Nissan in Vancouver would not pay sales tax or get a tax exemption as it would be irrelevant as they would not be paying sales tax. I have bought and sold in both states the tax is based off where you register which is linked to your residence. Otherwise there would probably be no dealers in Southwest WA. Dick Hannah is one of the biggest dealer groups in Portland but most of their lots are in Vancouver which makea no tax difference for buyers in either state.

      2. SparkEV says:

        Yes, not available in WA is what I meant. But if WA tax like CA where out of state purchases are subject to in-state sales tax, SparkEV could qualify. (Un)fortunately for WA residents, I don’t think that’s WA policy. Just having been “knee in the package” in CA, I’m still in mourning for my loss (money gone to tax).

        By the way, Canadian tax collector has great sense of humor!

    2. Speculawyer says:

      Why not? I guess because it is not sold in Washington.

    3. philip d says:

      They probably didn’t bother to list it because the Spark EV isn’t sold in Washington. The 500e is also not on the list because it isn’t sold there either.

      They may still qualify but just aren’t listed because they assume the consumers in their state aren’t buying them on a regular basis.

  6. Assaf says:

    Correction to article: this is not a new plan, but a second re-tweak of an existing policy.

    WA has had a sales-tax exemption for BEVs all along. Problem, it had no cap, so Tesla Model S buyers were partying here like nowhere else in the country.
    This got people mad, esp. as the Legislature is officially in contempt of the state Supreme Court for failing to adequately fund K-12 education.

    So last year they looked for easy outs, and one of them was to put a hard cap on EV subsidies at a $35k sticker price, with Tesla buyers now getting nothing.

    What JJ McCoy is reporting is a fix he and others have been working hard on, to put some nuance into this. Now the hard cap is at $42.5k price for a given car’s base model. So Model 3, the Bolt, and even the i3 BEV should be in. Surely the Leaf and the Volt are in.

    1. Jay Cole says:

      Whoops title should definitely not say “launches”…thanks for the heads up Assaf! /fixed

  7. e-lectric says:

    Toyota NOT going to be happy. Prius Prime doesn’t seem to qualify.

    1. Mike I says:

      Toyota has to sleep in the bed that they made.

    2. Speculawyer says:

      Toyota needs to build better plug-ins.

      1. danwat1234 says:

        With a 3.3KW charger under the rear seats, which does limit the seating to 4 instead of 5. They really should have seriously considered putting it in a bumper or under the car in the back or in the engine bay.

  8. Cwuwlaw says:

    Hoping Pacifica hybrid will qualify for the price and miles. Am I reading this right that $50k cars with higher trim levels qualify as long as the base model comes in under the $42,500? Based upon past sales, looks like this will sunset within a year or so.

    1. Assaf says:

      I think you got it right. It is a classic piece of sausage-making 🙂

      JJ wasn’t particularly brimming with happiness over the entirety of the fix, but clearly it’s better than the flat hard cap they introduced last year.

      Personally I think it does make sense to completely excludes cars whose price is well above midmarket. Especially with this sunset clause in there.

  9. Stephen D says:

    The count to 7500 started July 15 2015 not 2016!

  10. Doug Bostrom says:

    It would be a good thing to make tax breaks available to buyers of qualifying used vehicles as well. Of course there would need to be some kind of anti-churning provisions etc. but in fact a lot of people with lower incomes could especially benefit by not buying gasoline.

    1. Stephen D says:

      My opinion is all used vehicle sales should be exempt from sales tax. Why do products get taxed again and again as they depreciate just because the owner changes?