Texas Starts $2,500 Plug-In Incentive, Tesla Model S Not Eligible

MAY 17 2014 BY JAY COLE 41

Texas Finally Starts Their $2,500 Plug-In Incentive Program - As Expected, The Tesla Model S Is Excluded

Texas Finally Starts Their $2,500 Plug-In Incentive Program – As Expected, The Tesla Model S Is Excluded

Earlier this week we reported that the Texas Commission on Environmental Quality was in the process of finalizing the state’s $2,500 electric vehicle rebate program.

Already Eligible?  The Kia Soul EV...Which Is Interesting As Kia Currently Has No Plans To Sell It Inside State Borders

Already Eligible? The Kia Soul EV…Which Is Interesting As Kia Currently Has No Plans To Sell It Inside State Borders

We can now report that the program is now live, and qualifying plug-in vehicles can now receive the $2,500 incentive.

So if you live in Texas and have been holding off on that big electric vehicle purchase…go get it!

“The LDPLI is currently accepting applications for the purchase or lease of new eligible vehicles powered by compressed natural gas (CNG), liquefied petroleum gas (LPG), or electric drive (plug-in).”

As for the timeline, the credit is available to the first 2,000 applicants.

“Applications will be accepted on a first-come, first-served basis until June 26, 2015, at 5:00 p.m., or until all funding is awarded, whichever occurs earlier.”

As expected the Tesla Model S has been excluded from the cars eligible for the credit due to the company’s direct sales model.  The plan’s documentation (which can be found here) more than clearly defines why the Model S is off the list; stopping just short of mentioning the company by name.

1.6 REQUIREMENTSAdditional criteria that apply are discussed below.

a. The vehicle must be purchased or leased from a licensed new vehicle dealer or leasing company in Texas. Vehicles purchased directly from the manufacturer or an out-of-state dealer not licensed to sell or lease new vehicles in Texas are not eligible for a rebate.

Texas Incentive Program States That The Mercedes-Benz B-Class Electric Drive "May be available in Tx in early 2015."

Texas Incentive Program States That The Mercedes-Benz B-Class Electric Drive “May be available in Tx in early 2015.”

To check out what plug-in cars are “eligible” in Texas for the credit, the full list can be found in PDF format here. Other specifics on the program are as follows:

If the vehicle is powered by an electric drive it must:

  • have four wheels;
  • have been manufactured for use primarily on public streets, roads, and highways;
  • have not been modified from the original manufacturer’s specifications;
  • have an unloaded vehicle weight of no more than 8,500;
  • have a maximum speed of at least 55 miles per hour; and be propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of at least 4 kilowatt hours and can be recharged from an external source of electricity.

One thing Texas did wisely do is pro-rate the credit amount as it is applied inside a lease depending on the term length…so we won’t have a credit situation like Georgia where the full amount (up to $5,000 in that case) can be deducted from very short term leases.

While ‘nearly free’ lease rates are great for individuals who manage to get them as electric vehicle’s falling MSRPs reduce the cost of capitalization, the absurdity of the transaction ultimately threatens the ongoing status of state-based credit programs.

To be eligible for the entire $2,500 rebate inside a lease, the term must be at least 48 months; otherwise it is prorated – 25% for 1 year, 50% for 2 years, 75% for 3 years.  The incentive is capped at 2,000 vehicles per annum.

Hat tip to Josh!

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41 Comments on "Texas Starts $2,500 Plug-In Incentive, Tesla Model S Not Eligible"

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I read online earlier today that San Antonio and Reno were the two final candidates for the Gigafactory. Having the model as not be eligible for this rebate is a dick move by Texas. Hopefully it pushes Elon towards choosing Reno.

It goes without saying, that the first gigafactory goes to Reno, Nevada, because it is close to Tesla’s Fermont car factory. However, Tesla may be in plans to open second car factory in Texas, therefore San Antonio is probable location for the second gigafactory.

After all Tesla needs several car factories and several gigafactories.

Down, down, down goes model S! The limit of 2000 cars is tiny compared to California. And since all sorts of vehicles are eligible, it will probably end very soon.

who would want that van

It’s fascinating how the grip the cardealers lobby has on policy makers exposes the fundamentally corrupt nature of state politics.


I think Tesla can take it a step further.

They should let someone open an independent Tesla dealership in TX, and sell them cars at list price. The dealer will mark it up, but buyers can get $2500 off.

It’ll be a trojan horse to show how much dealers keep for themselves.


Strange that the eligible Ford vehicles (FFE, Fusion and C-Max) are listed as 2015 model year. The implication is that all the current 2014 models are not included, even though they are identical. The Volt and Leaf have no model year restrictions.

I have wondered about that as well.

why would you want to encourage and support an innovative American car company?

Interesting that leases have to be for 4 years to qualify for the full amount. Is Texas the only state doing it this way?

Yeah, that is weird. I suspect most folks that lease will be applying for an $1875 incentive.

It’s also interesting that PHEVs and BEVs are treated equally in TX… CA gives $2500 for BEVs, $1500 for PHEVs… perhaps oil companies are still big business with political influence in TX?

I’ve heard there are some gasoline related industries operating in Texas, so there may be some influence, but it would only have a proportional influence based on their contribution to the Texas economy, wouldn’t you agree?:-)


They’re probably worried about EVs going off lease and being sold in elsewhere. Since most leases are 36-39 months, this will help prevent that (which is basically TX subsidizing cars driven elsewhere). Obviously this sort of thing can happen even with purchases, but off lease-vehicles are low lying fruit.

Colorado does something similar. Colorado bases how much you get in state tax incentive upon the cost of leasing the car, and the size of the battery. Let’s say it costs 2,500 dollars per year (not including taxes, fees and deposits) to lease a car. The tax incentive for a 3 year lease would be based upon $7,500 dollars, times the size of the battery as a fraction. A 4 year lease would be based upon $10,000. For an outright purchase, the tax incentive is based upon the purchase price, minus any federal tax incentive, times the size of the battery as a fraction. Used cars are also eligible based upon the actual purchase price, as long as they are imported from out of state. All tax incentives are capped at $6,000 dollars, regardless of whether it is leased or purchased. The game is figuring out how to max out the incentive each way. Leasing an expensive car with a large battery will max out the incentive the same as buying a moderately priced EV. Buying isn’t always the answer, because buying a cheap EV with a small battery won’t max out the incentive either. Just like a lease on… Read more »

There goes their chance of the gigafactory.

I sincerely hope so.

I sincerely hope so!

So far, Elon Musk ‘ s response to resistance/blockage has been more than gracious, even in his complaint for the unfairness of the auto lobby influence.
He’s just as /likely to ‘turn-‘the-other-cheek’ regarding locating in Texas. That’s what would dominate the headlines for several days of free advertising (as his attitude towards direct competitors has done)

Just looked at the PDF for the vehicle list. I never realized how many CNG models were available.

I don’t think those are all available . . . are they? I knew there was the Honda GX (the only car) . . . and that there were some CNG trucks. But are all those trucks available now? I think many of those are just planned but not yet available yet.

It is interesting the way this is written. Even if Tesla gets an exception for direct sales, buyers will still not be able to claim the rebate on the purchase.

These rebates will be long gone before any legislation changes are made. I would be surprised if there is any funding left by Christmas.

Yeah, but there’s always next year. It will probably be renewed again.

Although it is a stupid move by Texas, I doubt that losing a 2.5% reduction in cost, which was not there yesterday, will defer most Tesla buyers.

Texas is the fracking capital of the World with two huge areas producing oil and Nat Gas around San Antonio and Midland. So, you can bet CNG cars are included on the list. See this for what it is; a green wash and a cover for the dirty air they are producing as a byproduct of fracking. The GOP and oil interests have control of the state and they are masters at bending Public opinion.

+1! Everyone needs to see Gasland and learn about renewable methane like Redeem!


Very interesting website. Thanks!

The maximum number of vehicles allowed is 2,000 electric drive vehicles and 2,000 CNG and propane vehicles for the first year. The law was passed to incentivize adoption of cleaner burning vehicles to help mitigate air quality non-attainment issues associated with extracting and refining much of the fuels used by the country and dealing with the building expansion (roads, homes, businesses) to handle the continuing migration of hundreds of thousands of souls into the state. Makes sense to promote cleaner fuels produced within the state with the state incentive. TX by far leads the country in wind power and produces almost all its electricity within its borders. It also has a huge surplus of nat gases. When the TX legislature meets next year (in session every other year and in their districts the rest of the time) maybe they will change the dealer franchise law which might enable companies like Tesla to sell direct. The tax break is aligned with current law, even as dated as it is.

That is nice that it is 50/50. I thought it was 2000 of any of those on a first-come, first-serve basis. It will be interesting to see which of those 2000 gets used up first. I suspect that it might be the gas ones because of all those trucks . . . and it is Texas.

Tesla is dealing with China and Texas for a fair marketing, I guess they know those places are alike.

Nope, not alike. You can buy a Tesla direct in Beijing.

It is really sad on an entomological level too.

Yep, Treebeard would be disappointed.

This is good news for EVs, Texas is really backwards and an EV desert (I’m from Austin) and natural gas rebates are controversial. Are they using super polluting fracked gas like the film Gasland shows?

Or is it renewable methane like Redeem? redeem.cleanenergyfuels.com

How do you know it is renewable when you fill up? Just because it says on a sign. The website says that the methane comes from landfills and is piped into the national system. So you aren’t really guaranteed that what you get is what came from the landfill.
I would like to know how much they collect and how much they sell. Then we can know if they sold less than what they collected

The autodealers are not very bright – if they were smart, they would just shut up and enjoy the protections they originally influenced – against the OEMs that they sell for.

Tesla is not a threat to them – Tesla is selling a vehicle that requires very little maintenance. No oil & filter changes, no belts, no transmission, etc.

Granted tires, A/C, motorized windows, windshield wipers., electric power steering, etc., will wear out as normal, but those are not common items (except for windshield wipers, which you can buy and install yourself from auto parts stores).

As such, the markup on parts and the cost of labor for repairs is virtually non-existent, particularly since the non-mechanical issues are simply upgraded/fixed with wireless firmware updates.

Dealers don’t want EVs, because the only hope they would have for profit is initial markup, which won’t fly.

I don’t entirely understand why auto dealers feel threatened – how can the OEMs get around the dealer protections? The dealers clearly have a lot of political clout, so they appear to be somewhat immune from OEM lobbying.

Depending on how the laws are worded, an OEM could not even set up a subsidiary to manufacture cars and sell direct. It would seem to be one heck of a headache to try to bypass the dealership model without superior political influence.

Tesla shouldn’t be penalized for its direct sales business model … however, it’s reasonable to not offer rebates on any luxury EV. It’s not going to make a signficant difference in sales of high-end vehicles, but it can be a deal-maker for the cheaper electrics.

At this point, I think Tesla is arguing to sell direct for the better customer service they can provide, not to be eligible for the rebate.

I am sure they would take the rebate if it was on the table though. It might not change the number of sales, but it might change someone’s mind about their option selections.