Electric Car Incentives 2021

If you’ve been on the fence about buying an electric car, or unsure whether the extra fuss of buying and owning one is worth it then this is your sign to take the plunge. 

Electric cars are changing the world and the environment for the better and by 2030 there are expected to be over 25 million annual EV sales.

There is a reason behind this surge of EV sales, mainly for environmental reasons but also because there are many incentives from federal and state authorities that are on offer to encourage consumers to switch from traditional vehicles to electric or plug-in hybrid cars. 

This article will take you through all the EV incentives from the federal government, respective states, and also EV incentives from utility companies. 

Federal Incentives

All electric or plug-in hybrid vehicles bought in or after 2010 are eligible for a federal tax income credit of up to $7,500. However, the amount you receive is based on your income tax and the size of your vehicle’s electric battery.

The bigger your car’s electric battery, the more money you can claim on your taxes, with fully electric vehicles being eligible for the maximum amount. However, this statement can seem redundant as the credit amount you receive is primarily based on how much income tax you owe. 

If you’ve bought a brand new all-electric vehicle and you owe $4,500 in income tax, then you’ll get a federal tax credit for $4,500. However, if you’d bought a new vehicle and owed income tax of over $10,000 then the tax credit you would receive would be the maximum amount of $7,500. 

Even if your car is eligible for the maximum tax credit of $7,500 if your income tax is $3,000 you will still be credited $3,000 and the unused portion of the credit is void. 

Rules to remember about federal tax credit:

  • The tax credit only applies to the registered car and cannot be passed onto another vehicle
  • If you lease cars, the tax credit goes to your car manufacturer and not you

Tesla and GM have currently used up all their tax credits and did so by March 2020. So if you do plan on buying a new Tesla or GM model then you won’t qualify for federal tax credit until the new Green Act bill is signed by Biden and the cap increases to 600,000 qualifying vehicles. 

There is also a federal tax credit that gives customers 30% off a JuiceBox home EV charging station which includes installation costs. This qualifies up to the price of $1000. This credit option runs out on December 31st, 2021.

Regardless of if you qualify for the federal tax credit or not for an electric vehicle, there are plenty of clean transportation incentives and funding opportunities in states across the country which seek to encourage people to buy more eco-friendly alternatives to gas-powered cars.

You should make sure to take advantage of these schemes as some only require simple application forms. 

State Incentives – California 

California is committed to reducing carbon emissions by 40% by 2030 and hopefully reaching carbon neutrality in 2045.

They have set out state incentives that would encourage citizens to make the switch from gas-powered vehicles to electric or even hybrid vehicles.

Read below to find out California incentives for electric cars.

California Clean Fuel Rewards Program (Low Carbon Fuel Standard)

One EV incentive is the Clean Fuel Rewards Program in California its funded by the Low Carbon Fuel Standard program whose aim is to reduce the carbon intensity of fuels in the state.

The standard was adopted back in 2007 by Governor Schwarzenegger in response to California’s Global Warming Solutions Act. 

The new clean fuel rewards are available completely upfront, meaning there is no extra paperwork to be filed beforehand. You will have $1,500 taken off the purchase price of the EV when you pay for it. 

Unfortunately, the Clean Fuel Rewards program is no longer offering rebates on used electric vehicles. The new incentive of the program has changed and will be based on the battery size in the EV, not all vehicles will be eligible for the full amount. 

Electric vehicles with a battery of 5kWh or larger will only be eligible for some of the incentives whereas an EV with a battery of over 16kWh can obtain the full $1,500. 

To summarise, those who buy a full EV will get nearly the full amount from the incentive, those who buy hybrids will get a proportion of the incentive, and EV motorcycle customers will get around $1000 off their purchase. 

To find out how much certain vehicles are eligible for under the California Clean Fuel Reward incentive then click here.

California Clean Vehicle Rebate Project (CVRP)

The CVRP in California has helped put over 400,000 electric vehicles on the roads since 2010.

Most Californians are eligible for a rebate of up to $4,500 on the purchase or lease of an electric vehicle, depending on the vehicle and low-income residents of the state are entitled up to $7,000 in rebates.

General California Residents Eligibility

Type of VehicleRebate
Fuel Cell Electric VehiclesUp to $4,500
Battery Electric VehiclesUp to $2,000
Plug-in Electric Hybrid VehiclesUp to $1,000
Zero-emission MotorcyclesUp to $750

Low Income California Residents Eligibility

Type of VehicleRebate
Fuel Cell Electric VehiclesUp to $7,000
Battery Electric VehiclesUp to $4,500
Plug-in Electric Hybrid VehiclesUp to $3,500

There is not an increased rebate amount for low-income residents purchasing or leasing a zero-emissions motorcycle. 

Key Things to Know about the Clean Vehicle Rebate in California

  • The car you’re purchasing or leasing needs to be registered as new in California
  • Customers are limited to one EV rebate in a lifetime
  • If the price of the vehicle is higher than $60,000 then you won’t qualify
  • Higher-income customers are not generally eligible for the rebate
  • You can apply for the rebate within 18 months of the purchase or lease date
  • The lease term of the EV needs to be at least 30 months
  • Rebates come in the form of cash or a check within 18 months after your purchase or lease

Big manufacturers like Honda, Hyundai, BMW, Nissan, and even Tesla are eligible for the CVRP scheme. If you’d like to find out the full list of eligible vehicles for the incentive then click here

San Diego residents can get preapproved for the CVRP Now incentive before purchasing or leasing an eligible vehicle. San Diego is the first county in California to be trialing this preapproval pilot, once the pilot is successful the pre-approval option will launch across the entire state. 

If you are a resident of San Diego and intend to go forth with this pre-approval option, you must make sure that the dealership you are purchasing or leasing the vehicle from is a participant in the CVPR Now (pre-approval pilot). 

To find out more information about getting pre-approved for the Clean Vehicle Rebate Project in San Diego County then click here.

Clean Vehicle Assistance Program

The program was launched in 2018 through a partnership between the Beneficial State Foundation and the California Air Resources Board and is funded by the California Climate Investments (CCI) to make environmentally-friendly vehicles more accessible and affordable for households of lower incomes. 

The program provides grants to low-income households towards new or used all-electric or hybrid vehicles. You can get a grant of up to $5000 towards a more eco-friendly car depending on your income. The maximum qualifying income for a single person household is $51,040

Local Fuel Incentives in California

There are also more local rebate programs in California that are available on top of the CA Clean Fuel and any other state or federal incentives.

City of Riverside (Alternative Fuel Vehicle Program) 

This program allows the residents of the City of Riverside to be eligible for rebates when purchasing or leasing a qualified alternative fuel vehicle from a dealership within the City.

A plug-in hybrid, hybrid, and a natural gas vehicle are not eligible for this rebate scheme. 

Type of VehicleIncentive
Electric Vehicle$500
Hydrogen Fuel Cell Vehicles$500
Neighborhood Electric Vehicles (NEV)$250
Electric Motorcycles$250

This rebate scheme only applies to new and not pre-owned alternative fuel vehicles. Applicants for the scheme will need to prove their residency within the City at the time of application submission.

If you are a resident of the City of Riverside and want to find out the full list of eligibility requirements for the scheme then click here

San Joaquin Valley (Drive Clean Program)

The District of San Joaquin Valley has a Drive Clean Rebate Program which provides rebates to businesses and residents who purchase or lease a clean-air vehicle.

They offer a maximum rebate of $3,000 depending on what vehicle you have. 

Type of VehicleIncentive
Battery-Electric VehicleUp to $3,000
Hydrogen Fuel Cell VehiclesUp to $3,000
Plug-in Hybrid Electric VehiclesUp to $2,000
Zero-emission MotorcyclesUp to $1,000
Natural Gas Vehicles (Super Ultra-low Emission)Up to $1,500
Natural Gas Vehicle (Advanced Technology Partial Zero-emission)Up to $2,000

If you are a resident of the district and considered buying a clean-air vehicle, click here to find a full list of eligible vehicles for the scheme.

To find out the full guidelines on the scheme and access the application form click here.

Bay & Sacramento Area (Clean Cars 4 All)

The Clean Cars 4 All scheme offers grants to income-qualified residents in the Bay or Sacramento area who retire their old car and replace it with a plug-in hybrid or battery-powered car.

You can also receive a grand towards an at-home charging EV station. 

Your household income and the new vehicle you choose will determine how much you get from the Clean Cars 4 All program.

Here below is a table of what you could receive based on what option you choose.

Vehicle or Other OptionsGrant Amount
Plug-in Hybrid$5,500-$9,500
Battery Electric and Fuel Cell$5,5000-$9,500
Mobility Options (Public Transit, E-bikes, etc)Up to $7,500
Optional Home EV ChargerUp to $2,500

In the Bay Area, there is also an additional $500 grant to new applicants who are enrolled in low-income programs including Supplemental Security Income, Free or Reduced National School Lunch Program, and more.

South Coast Area including Los Angeles (Replace Your Ride)

The Replace Your Ride scheme can offer up to $9,500 if you replace your gas or diesel-powered vehicle that is 2011 or older with a new more eco-friendly (full electric, plug-in, or hybrid)  vehicle. You can also receive vouchers for public transit or car-sharing alternatives. 

You are only eligible for the scheme if you reside in the jurisdiction of the South Coast Air Quality Management District (Los Angeles, Orange County, Riverside, and San Bernardino) and have a household income at or below 400 percent of the federal poverty level. 

For more information on eligibility for the Replace Your Ride scheme, click here

Carpool Stickers

The California Department of Motor Vehicles has issued car stickers and decals for vehicles that meet the specified emissions standards to be able to use the HOV (High Occupancy Vehicle) or carpool lanes and also the HOT (High Occupancy Tolls).

These stickers will allow you full access to carpool lanes with no repercussions.  You will also be eligible for reduced rates or even exemptions from toll charges at HOT lanes. 

A full list of the eligible vehicles for the carpool sticker can be found here, if you cannot find your vehicle on the list then you or a manufacturer can get in contact with the California Air Resource Board if your vehicle is presumed or approved eligible. 

The Electric Vehicle Supply Equipment (EVSE) Loan and Rebate Program

The EVSE program provides incentives for small businesses and landlords in California to install electric vehicle charging stations for employees, tenants, and clients.

This is to help to increase the number of charging stations in the area so residents are encouraged to retire their gas or diesel-powered cars and turn to electric vehicles. 

The maximum enrolled loan amount a business or landlord can receive to install EV charging stations is $500,000.

Utility Incentives

In 2017, PG&E (Pacific Gas and Electric) launched a clean fuel rebate program which gave a one-time $800 rebate to PG&E customers who were EV drivers. This was on top of the federal and state incentives that were available as well.

Unfortunately, this rebate program ended back in 2020 but in those 3 years PG&E paid out over $92 million to over 145,000 utility customers in rebates. 

As of 2021, PG&E does not currently have utility incentives available for electric cars but if this changes, we’ll be sure to update it right here. 

PG&E does however offer different residential rate plans for their customers depending on their usage and when and how they use electricity in their home.  You can check out the rate plans for PG&E right here.

Map of the US with clickable states

Electric car incentives will vary from state to state and even if your new electric vehicle doesn’t qualify for federal tax credit then you could still receive a grant or rebate from your respective state towards our vehicle. 

Click below on your state to find out what options are available to you regarding electric car incentives. 

Frequently Asked Questions

What are the different types of electric vehicles?

The 3 types of electric vehicles are fuel-cell electric cars, battery-electric cars, and plug-in hybrid electric cars. 

  • Fuel cell electric cars are powered by hydrogen gas which feeds the onboard fuel cell stack. This fusion produces electricity which powers the car’s motor. 
  • Battery electric cars run entirely on electricity and require to be charged by plugging into an EV charger at home or a public station. 
  • Plug-in hybrid cars are exactly what they say, they are part gasoline and electricity and need to be plugged in to charge up the electric battery.

What new electric cars are coming out in 2021?

Some of the new electric cars coming out in 2021 are:

  • Tesla Cybertruck
  • Volvo Polestar 2
  • Nissan Ariya
  • Mercedes-Benz EQC
  • Volkswagen ID.4
  • Hyundai IONIQ Electric

What is the best brand for electric cars?

Some of the most popular brands for electric cars are Tesla, Nissan, Honda, and BMW.

However, all these brands vary widely in price and have different features and upgrades which make them more desirable to users. 

What are the negatives of having an electric car?

Electric cars whilst they are still better for the environment do have some downsides:

  • They have a shorter distance range than gas-powered cars, meaning you’ll have to fill up at a charging station more frequently
  •  Recharging them also takes a lot longer than putting gas into your car would
  • If you’re not lucky enough to have an EV charging station then you’ll have to drive somewhere and find one to fill up your car
  • If you haven’t got many EV charging stations in your area, then you’ll have to drive further out to fill up your car, which will also use more power to drive back home again
  • Electric cars are often a lot more expensive than traditional gas-powered cars
  • There are fewer models of electric cars than there are gas cars, so there is less choice when buying one

Are electric cars cheaper to run than gas-powered cars?

Yes, fully charging an electric car with electricity is a lot cheaper than filling up a full tank of gas for a traditional car.

Price differences between electric charging and fuel will vary between utility companies or public charging station costs.

Battery-electric cars also require less maintenance and repairs because there are fewer parts to break inside the car. 

Are electric cars cheaper to insure?

Yes, electric cars do tend to be more expensive to insure than traditional vehicles. However, this factor will all depend on what model car you have and what insurance company you are with.

The lithium-ion batteries in electric cars are very expensive to repair or replace and that’s why insurance companies crank up the price of their quotes. 

Are electric cars harder to drive than traditional cars?

No, not necessarily, but it might be difficult to get used to in the beginning. Electric cars are very quiet and it takes people by surprise when they first start driving them.

There is obviously the absence of an engine and gearbox in an electric car. However, once you get over the initial first day, you’ll find driving an electric car no different from a gas or diesel car. 

How do EV incentives work?

As electric vehicles are better for the environment, the government offers incentives like lowering the upfront cost of buying an EV to encourage people to turn to electric cars.

These incentives are in the form of tax credits or rebates which are returned to the customer during the year after buying an electric vehicle.

How much you receive in return for people an eco-friendly car will depend on the model and when you bought the car.

Sometimes electric vehicles must be purchased from a licensed auto dealer for the incentive to work. 

Can I claim the federal tax credit and state incentives on my electric vehicle?

Yes, you can claim for both federal and state incentives, but outcomes may vary depending on the model of your car, where you got it from, and also your household income. 

Which cars qualify for the carpool lane sticker?

Clean alternative fuel vehicles qualify for the carpool lane sticker. To find a full list of qualifying vehicles click here.

How long do carpool lane decals last?

Every year the California DMV will issue new colors for their decals. Their decals expire on the 1st day of January every fourth year. 

What is EVSE?

EVSE stands for electric vehicle supply equipment they are also known by their shorter name of EV chargers or charging stations.

EVSEs or EV chargers can be installed inside or outside any home and can be found all over the country in parking lots, shopping outlets, and service stations. 

Are there incentives for EV charging stations?

Yes, there are incentives for those who want to buy or have bought EV charging stations.

Can I still get a rebate for an EV charger I’ve previously bought?

Yes, you may still be able to claim a rebate for an EV charger that you purchased before the incentive scheme start date, but you’ll have to check with the regulations of your state. 

Do you get incentives for used electric cars?

No, you cannot get federal tax credits for a used electric vehicle. However, there may be state incentives for buying a second-hand EV depending on where you live. Used electric cars are less expensive than new ones, so the need for an incentive is not as big.

What is the difference between a tax credit and a rebate?

Tax rebates are given directly to the taxpayer even if the tax isn’t payable. Tax credits offset tax balances due, so you don’t benefit from tax credits.

How long will it take to get my tax rebate?

It can vary from state and individual, but normally the tax credits are applied within the year that you purchased the electric vehicle. 

Why is Tesla not eligible for the federal tax credit?

The electric car federal tax credit runs out when car manufacturers sell 200,000 qualifying vehicles and Tesla has reached this milestone so it is not eligible for a tax credit at the moment until a new bill is passed to increase the number of qualifying cars. 

How long does it take for a Clean Fuel Reward reimbursement?

Claims for the Clean Fuel Reward are normally reimbursed within 10-14 days of receiving the claim. 

How much does an electric car increase your electricity bill?

Fully charging an EV from a flat battery can cost between $5-10 depending on the size of the battery and mile range of your EV.

So if you were charging your EV from a flat battery twice a week every month, it could add an extra $40-80 to your electricity bill a month. 

Michael Schuck

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