Last week, the Colorado State Legislature passed a bill that would simplify the state's electric car incentives.
However, it would remove the eligibility of used cars that could qualify for the same credit.
The measure, House Bill 16-1332, would make the state's electric and alternative vehicle credits considerably simpler, by giving the tax credit some of the characteristics of a purchase rebate.
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The changes would let dealers offer an incentive "on the hoods" of new cars, rather than requiring buyers to wait until they file for the credit as part of that year's tax return.
Colorado currently has one of the country's most generous tax credits: up to $6,000, depending on battery size.
Unlike tax credits in other locations, Colorado will actually refund money if the credit exceeds the tax owed. The Federal credit, for example, can only be used to reduce taxes to zero.
2016 Tesla Model S
The new bill would cap the credit at $5,000, simplifying the math. But it would also let new-car buyers transfer their tax credit to a dealership or financing agency—effectively making it an instant discount on the purchase price.
Under the new rule, dealers would be allowed to charge up to $150 to transfer the credit.
Tim Jackson, who is president of the Colorado Automobile Dealers Association, said his organization supported the measure and originally wanted to cap the total cost for the vehicle at $60,000.
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"We do not think it makes sense for Colorado to throw in ($5,000) on high-end electric sports car that may be third, fourth, fifth or sixth car in a garage," he said, "when a soccer mom can't get break on needed minivan that isn't yet quite so green."
(Tesla Motors, the only volume maker of plug-in vehicles costing more than $60,000, is not a member of the association because it does not use franchised third-party dealerships.)
The new legislation ends the state's incentives on used electric cars, which buyers qualified for if buying a used car that hadn't previously been registered in the state.
2015 Nissan Leaf, Denver, Colorado, Mar 2016 [photo: owner Andrew Ganz]
“It’s totally going to hose me," said Luke Walch, owner at Green Eyed Motors in Boulder, which specialized in used electric car sales.
Walch brought in many electric cars from other states—including many not originally available for sale in Colorado—that qualified for the tax credit and would otherwise qualify for the new rebate.
"If their ultimate goal is to get more electric cars on the road, it doesn’t make sense," said Walch.
"The barrier of entry is absurdly high with some electric cars," he said. "I can sell a Leaf on my lot for $8,300."
"I’ve tried to sell electric cars without (the credit) and with it. It's going to have a huge impact."
2017 BMW i3
The bill had wide support from dealership groups and manufacturers, including bipartisan support in the Legislature.
It awaits Colorado governor John Hickenlooper's signature within the next few days.
A spokeswoman for the governor's office didn't immediately say whether the governor was considering a veto.