Coloradans shopping for an alternative-fuel vehicle will soon have a new incentive: $5,000 off at the time of purchase. House Bill 16-1332 awaits Gov. John Hickenlooper’s signature. It replaces the old plan in which eligible owners struggled with a series of calculations (price multiplied by kilowatts divided by 100) that offered a credit on Tax Day.
Under the new rules, lenders deal with the paperwork so buyers receive the discount immediately.
“Having the highest incentives is great, but making them simpler is better,” said Wes Maurer, transportation program manager for the Colorado Energy Office. “That was the spirit of this legislation, to reduce the number of calculations.”
The state tax credit is basically the same as before. It’s also in addition to about $7,500 in federal tax credits.
Hickenlooper pushed for the change, so his approval is expected. Once passed, the law would take effect Jan. 1.
“That’s fantastic news,” said Markus Kamm, general sales manager at Tynan’s Nissan in Aurora. “People would come in and ask us about these tax credits. But we are always so hesitant to answer some of these tax questions because we don’t want to say the wrong thing.”
The hope is to speed up the proliferation of such cars. Maurer, who called the old plan ” 9 simple steps to get your credit,” said Colorado’s goal is for 3 percent of all vehicles sold to be alternative-fuel cars by 2020. Maurer estimates the figure is about 0.9 percent today.
“We know from other states that have high adoption rates of electric vehicles, like Georgia and California, these states have had very simple credits,” Maurer said. “Our anticipation is we will see similar upticks.”
In California, alternative-fuel car owners can get a rebate of up to $2,500 after a purchase or lease. The vehicles that qualify have changed over the years, said Dave Clegern, a spokesman for the California Air Resources Board. In California, 202,744 electric vehicles have been sold since 2011.
“We’ve sort of slid the incentives as the bar has gone up. You don’t get incentives for a straight hybrid anymore. You used to. But you now need a plug-in hybrid,” he said. “And there used to be no hydrogen vehicles. Now those get the top rebate.”
Colorado taxpayers can still claim the credit on their taxes the following year. But the new law lets the buyer sign away the credit in exchange for an instant discount.
That means the buyer would give the right to claim the credit to the financial lender, who in turn would offer the discount at the time of purchase. That would allow auto dealers to offer financing plans that include the credit.
“It’s marvelous,” said Nigel Zeid, a sales, leasing and electric vehicle consultant at Boulder Nissan, who was consulted on the bill. “This way is so much easier from a lot of perspectives. And it doesn’t matter what size car you got or the size of the battery. It’s $5,000.”
He sees the credit as more of a marketing tool than a negotiating tool. Nissan shares list prices of cars so consumers know the cost. The automaker currently offers a $4,000 incentive plus 0 percent financing on the Nissan Leaf, a 100 percent electric car.
Because the tax rebates are about the same in the old and new laws, he doesn’t think consumers will postpone a purchase — except maybe on the Leaf S Model with the charging port. The state tax credit on that is about $3,900.
“It may make a difference (for those buyers),” he said. “Next year, they would get the full $5,000.”
In Colorado, vehicles eligible for the incentive are the same as before and must rely partly on electricity, natural gas, hydrogen, fuel cells or other alternative fuels.
Sales of electric vehicles in the state have increased over the years. In 2011, a mere 20 electric vehicles were registered with the state. As of December, 6,341 electric vehicles were registered. The number of public charging stations has grown to 310, from 80 in 2013.
If the new law causes a rush on alternative-fuel vehicles next year, buyers shouldn’t fear that the state credits will run out. But the state will start reducing the credit amount in 2019. For cars, it’ll drop to $4,000 in 2020, and then to $2,500 in 2021. (Credits for leasing such vehicles are half of what a new car owner would receive.)
Will Toor, transportation program director with the Southwest Energy Efficiency Project in Boulder, called the new law “the best alternative fuel incentive in the country.”
Toor helped create the formula for the older law but said it just wasn’t working.
“Imagine being a car dealer and having to explain that (formula). It made it difficult for car dealers to understand. But imagine just saying, ‘You get a $5,000 tax benefit, and we can give it to you at the point of purchase,’ ” Toor said. ” Research around the country has shown that by offering the same amount off at the point of sale — as opposed to (a tax credit) the next year — has spurred sales.”
The legislation also found bipartisan support. The state House voted last month 64-1, while the Senate gave unanimous approval.
“It’s clear to consumers as well as to air quality,” said Crisanta Duran, House majority leader and sponsor of the bill. “For dealerships to take advantage of this and to make sure air is clean, that is what we’re addressing.”
Tamara Chuang: tchuang@denverpost.com or visit dpo.st/tamara
Simpler incentives on alternative-fuel vehicle purchases:
Expected to go into effect Jan. 1, 2017, tax credits on alternative-fuel vehicles purchased after that date can kick in at time of purchase, depending on the lender. The credit amount also has been simplified based on type of vehicle. Leased vehicles get half the amount listed below:
$5,000: New cars, a.k.a. light-duty passenger vehicles
$7,000: New light duty trucks
$10,000: New medium-duty trucks
$20,000: New heavy-duty trucks
Source: Colorado Energy Office
