Study: State Incentives Drive Electric Vehicle Sales




The International Council on Clean Transportation (ICCT) recently released an interesting report title “Evaluation of state-level U.S. electric vehicle incentives”.

Incentives are usually a political mine field, as there are always two sides – those who would like incentives and those who don’t. ICCT focuses on how incentives influence sales and, as we all know, if you can grab additional grand or two in state-level incentives, then sales will be higher.

Here we have two graphs showing consumer benefit and new vehicle share for U.S. states – in order by the largest total battery electric and plug-in hybrid electric incentives or by largest total new battery electric and plug-in hybrid electric vehicle shares.

Not every state with high incentives is above average for EV shares. Louisiana probably leads the states with highest incentives, but lowest impact on sales.

An important finding is that non-direct incentives (like carpool lane access) can be a very strong sales stimulus.

 Consumer benefit and new vehicle share for U.S. states with largest total battery electric and plug-in hybrid electric incentives (2013 electric vehicle registration data provided by IHS Automotive).

Consumer benefit and new vehicle share for U.S. states with largest total battery
electric and plug-in hybrid electric incentives (2013 electric vehicle registration data provided by
IHS Automotive).

 Consumer benefit and new vehicle share for U.S. states with largest total new battery electric and plug-in hybrid electric vehicle shares (2013 electric vehicle registration data provided by IHS Automotive).

Consumer benefit and new vehicle share for U.S. states with largest total new battery
electric and plug-in hybrid electric vehicle shares (2013 electric vehicle registration data provided
by IHS Automotive).

Source: Green Car Congress

Category: General

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24 responses to "Study: State Incentives Drive Electric Vehicle Sales"
  1. Nate says:

    Maybe I’m misreading the charts, but it looks to me like Washington has the same benefit for PHEV as they do for BEV. Is that right? I thought they had a sales tax exemption that was BEV only?

    1. Stephen says:

      True. There are no benefits for PHEVs. Only the i3Rex is recognized as a BEV for sales tax exemption. I question the data used for these charts.

  2. alain says:

    this show’s how little people know how the system works.Energy is what makes a good economy.The cheaper the better.when the cost of electric cars come down,the money every one will save, will paye easyly for the little we put in ,very little .Let face it,we spend a lot on gas ,more than you think!all the goods have gas price that come with it!even food!so if in 15 to 20 years ,we use say 50 to 70% less .that would pay about 5 million times what we invested in the first places .(now if we could just get rid of debt money system,sure i can dream too)!

    1. James M says:

      Very good point. In British Columbia for example we did have a $5,000 incentive, but the fund ran out 8 months ago. And there’s no federal incentive. Still EVs are gaining in popularity because we already have great economic incentives built in. As of July, 2014, there were an estimated 1,300 electric vehicles in BC, which includes both sales and imports. There were 284 vehicles sold in 2012 and 505 in 2013. By the end of July 2014, 374 vehicles were sold, up 30% from the same time last year. (Source )

      Electricity is only $0.06/kWhr in BC, whereas gas in Vancouver equates to $5US a gallon ($1.25CDN a litre). Also, public charging here is free. So our Leaf is saving us at least $2,000/year over what even our frugal Civic costs to fuel. In a few years, we’ll apply these savings to a long range Tesla Model 3 to save even more!

  3. ffbj says:

    Surprising to me is the size of the incentive in LA, a pretty oily state. Not surprising, I suppose, is lack of ev and phev vehicle adoption in that state. Incentives do not seem to be having much of an effect there.

  4. Assaf says:

    Well, sorry but to my trained eye – besides the obvious data errors (more below) – there’s little relation.

    One can argue that a state’s weather, geography and political culture, as well as infrastructure, are a far better driver of EV adoption than incentives.

    There are notable exceptions, e.g., Georgia, but far more counter-examples e.g. Oregon and Washington with very modest incentives and among the highest EV market shares, and LA/CO/TX (TX incentives started recently) on the other extreme.

    As to Washington, the figure is highly misleading. Most BEV drivers lease their car, not buy it (esp. with Leaf). The sales-tax benefit for us is then a paltry few hundred $ over a couple of years, during which we pay extra in EV fees.

    Incentives matter – surely if the Federal incentive is yanked tomorrow, it will be a huge hit on sales – but state-to-state variability is driven mostly by other factors.

    1. Nate says:

      Considering Washington’s tax rate, the sales tax exemption seems pretty big incentive to by a car that qualifies vs. one that does not.

      Even on a lease, lets say it is ‘just’ $375 on a 2 year lease. That’s your tax for 2 years. You’d need to multiply that number by the number of times you lease a BEV vs. a different vehicle to see the benefit. Do this for 6-8 years and it adds up to $1100-$1500.

      However, since WA is a state that doesn’t force you to pay the tax on the lease all up front you can spread it across your payment. $15.63/mo doesn’t seem like a lot compared to 4 digit numbers so I see your point.

      1. Assaf says:

        For an affordable EV it’s almost always <$300/year over the lease period, which is rather small both in comparison to other states and to the Federal incentive. Other states allow you to pocket the full incentive of a couple thousand, even on the lease. Likewise the Federal incdentive: you can buy a BEV year after year, selling the old one each time, and get $7.5k off each time.

        Add to that the fact that in WA we pay an extra $100/year in a special BEV tab fee, and you have a very modest overall $$ incentive, certainly not one that explains WA's position in the top 3 for EV adoption rate.

        Which was my point: not to complain on how small the incentive is, but to dispute that it is the main state-level driver nationwide.

        1. Stephen says:

          The sales tax exemption is sunsetting out in about 2 years, so even if you leased for 3 years today you will not get the full benefit. It might explain the swarm of bought Teslas in Seattle where a sales tax saving of $7,000 – $12,000 is possible on the Model S.
          I believe WA residents are very environmentally aware and know that most electricity generation in WA is CO2 free.

          1. Nate says:

            Stephan, I’ve lived in a few different communities within the Pacific NW. Eugene, Seattle, and Portland, and communities near I-5 are similar but priorities are not the same throughout the whole region.

            The power source for the power consumed by residents of Washington has less to do with their choices, and much more to do with the choices of previous generations. Washington benefits from cheap electricity that primarily comes from hydro. Glacier melting, drought, and population could easily make power source that seems reliable at the moment. Washington could end up more like Northern California. Think things are good right now right and are primary source is guilt free? Hyroelctric power plants have significant impact on wildlife and communities. The impact is not just at the site of the plant, but also upstream and downstream. They aren’t greenhouse emission free either. There construction is significant, and once constructed they are not impact free. When you create or change reservoir levels, vegetation will decompose and release CO2, and even worse, methane. There won’t be more plants built like the ones that provide most of Washington’s power, and there are movements to remove existing ones.

        2. Nate says:

          Thanks for the additional detail Assaf. I didn’t realize the registration fee was every year. That cuts the current incentive to buy a BEV in half for an inexpensive BEV.

  5. Murrysville EV says:

    I’d like to see these figures with respect to vehicle price.

    My theory is that incentives really only aid the sales of lower-priced vehicles. Tesla – and to a lesser extent Porsche and BMW – probably won’t be harmed much if/when subsidies subside.

    1. braben says:

      Probably true for direct subsidies, but I think dropping carpool lane privileges would hurt Tesla here in CA. I know several people who got a Model S rather than a conventional luxury car just for that.

    2. E.V. Fitter says:

      I can only speak for myself but I would not have been able to afford my i3 without the fed tax credit. Even with the credit it was still a stretch. (My state offers no incentives and is considering adding fees to electric and hybrid cars.)

  6. Trying to understand differences between “largest total battery” and “largest total new battery”? Does battery size and age matter? (scarcasm: as neither not part of incentive & benifit data)

    Realizing the long winded titles are essentially the same: just first graph is ordered by “consumer incentives & benifit” amounts while second graph is ordered by EV “market share” in each state. It would be more clear if all states were displayed!

    The graph titles …
    “Consumer benefit and new vehicle share for U.S. states with largest total battery
    electric and plug-in hybrid electric incentives (2013 electric vehicle registration data provided by
    IHS Automotive).”
    “Consumer benefit and new vehicle share for U.S. states with largest total new battery
    electric and plug-in hybrid electric vehicle shares (2013 electric vehicle registration data provided
    by IHS Automotive).”

  7. Seeing 5 states that have BEV market share greater than 0.5%, but only 3 states have PHEV market share greater than 0.5%.

    States with BEV market greater than 0.5%
    WA, CA, HI, GA, OR

    States with PHEV market greater than 0.5%
    CA, VT, OR

    1. Nate says:

      This will be interesting to see what happens as time goes on. It is so early. There are a lot of new upcomming plug ins coming in the next few years. The BEV’s tend to be smaller or mid size, other than the ever delayed Model X. The PHEV’s include SUV’s and even a minvan. The US loves large vehicles..

      1. There has been an interesting trend develop between BEV & PHEV sales in 2014 as gas have dropped. HPEV sales have cooled down, while BEV sales have remained hot.

        While there are more PHEV models on sale, the total sales per month has dropped below a smaller choice of BEV sales. For OEMs focused on an PHEV only strategy vs. a combined, or BEV only strategy will see increased completion for fewer PHEV shoppers.

        1. Nate says:

          Correlation does not imply causation. Gas prices are far from the only variable. The number of BEV’s and PHEV’s choices are very small compared to the overall vehicle market. If inventory is not there for any of the top models, you will end up getting unreliable data for the purpose of determining consumer demand. You have not had strong marketing and inventory from Toyota, Ford or Chevy for a large part of this year. You won’t see Volt marketing push up until the next generation gets out. Toyota’s marketing and inventory of the PIP has been non-existent.

          It is to early to think you see some kind of trend. The number of sales is still very small. Look at the number of trucks, suv’s and minivans on the road. When there are BEV and PHEV choices in this segment is when you will start to see what the true consumer preference is.

    2. Stephen says:

      WA BEV – no sales tax
      WA PHEV – about 10% sales tax
      Diff = thousands of dollars

      1. WA BEV – no sales tax (on new, not used) but pay $100/year BEV regsteration fee
        WA PHEV – about 10% sales tax, no $100/year BEV regsteration fee
        Diff = thousands of dollars … depends on original price (eg: LEAF vs Tesla)

  8. While the study and article title are focused on how …
    “State Incentives Drive Electric-Vehicle Sales”, there is little correlation to market share data.

    State … BEV% … PHEV% … (incentives)
    … HI … 1.2% … 0.4% … (BEV & HPEV ~$2300)
    … WA … 1.4% … 0.5% … (BEV & HPEV ~$2000)
    … CA* … 1.3% … 1.2% … (BEV ~$4000, PHEV ~$3000)

    The best states for demonstrating lack of correlation are Hawaii and Washington states. Both offer similar incentives to both BEVs and PHEVs, but market share for BEVs and PHEVs differ significantly. California* has somewhat similar benifits, but incentive motivator for PHEV is HOV access, which is minimal for BEV sales. Benefits and incentives for the other states differ between BEVs & PHEVs so comparisons are less meaningful.

  9. Bonaire says:

    Lack of sales tax is hard to compute in there because it will vary on car price. From $8k benefit for a loaded Tesla in NJ to $2k for a base Leaf.

  10. ModernMarvelFan says:

    I think the biggest thing missed here is the fact that BEV on averages are cheaper to lease than PHEV. (excludes Tesla).

    Combined with the significant discount from State sales tax or state incentives, the effective “lease price” of BEV in those top states are much lower than PHEVs. That is why BEVs are doing well.

    The state incentives make such a high impact on leasing price…