Behind the Quiet State-by-State Fight Over Electric Vehicles
By HIROKO TABUCHI
Mar 11 2017
When Georgia repealed its generous $5,000 tax credit on electric vehicles in July 2015, and instead slapped a $200 registration fee on electric cars, sales quickly tumbled.
In the month before the repeal, nearly 1,300 electric vehicles were sold in the state. By August, those sales had all but evaporated — to just 97 cars.
It was a hint of what would come.
Today, the economic incentives that have helped electric vehicles gain a toehold in America are under attack, state by state. In some states, there is a move to repeal tax credits for battery-powered vehicles or to let them expire. And in at least nine states, including liberal-leaning ones like Illinois and conservative-leaning ones like Indiana, lawmakers have introduced bills that would levy new fees on those who own electric cars.
The state actions could put the business of electric vehicles, already rocky, on even more precarious footing. That is particularly true as gas prices stay low, and as the Trump administration appears set to give the nascent market much less of a hand.
In coming days, the Trump administration is widely expected to roll back stringent federal regulations on vehicle emissions, one of the biggest environmental legacies of President Barack Obama. The changes would give American carmakers less incentive to produce more battery-powered cars. There are also concerns among advocates of electric cars over the fate of a $7,500 federal tax credit on the vehicles, a major catalyst for sales.
But while the battle in Washington gets much of the attention, the most direct attack against electric vehicles, and in some cases hybrid vehicles, is quietly being waged at the state level.
In Colorado, a bill that would end income tax credits for owners of electric and alternative-fuel vehicles is working its way through the legislature. In Utah, lawmakers voted this month against extending the state’s tax credit for electric cars.
The measure in Colorado has been backed publicly by Americans for Prosperity, an advocacy group founded by the conservative billionaire brothers David H. and Charles G. Koch, whose wealth is founded on their petrochemicals empire.
A handful of other states, including Illinois, Pennsylvania and Tennessee, have already let their incentives expire. That has brought down to 16 the number of states that offer financial support for buyers of electric vehicles. That number once approached 25.
“It’s baffling,” said Matt Jones, a Democratic state senator in Colorado, who opposes the move to repeal the tax credit. “It’s very counterproductive.”
It is unclear how many of these measures will pass. In Colorado, for example, support for clean vehicles has long enjoyed bipartisan support. Still, the backward slide in incentives “is going to be a big issue and crash this market further,” said Jessica Caldwell, executive director for industry analysis at Edmunds.com.
Even with the incentives, overall sales of electric vehicles are only about 1 percent of the American market. To start making a real dent in the market, Ms. Caldwell said, “electric vehicles still need to be subsidized for a significant amount of time.”
A slowdown in the country’s shift toward battery-powered vehicles could leave the American auto market a global laggard, electric vehicle proponents warn. They say a similar situation played out a couple of decades ago, when American car companies stayed away from small cars, leaving a big opening for Japanese companies.