Curt Robbins's picture

Will Georgia EV Tax Hurt Tesla Model S Sales?

Georgia has eliminated its $5,000 electric car tax credit, replacing it with a $200 tax. Will this dissuade buyers from choosing the Tesla Model S, Nissan LEAF, and Chevy Volt? Environmentalists and EV advocates are crying foul over the Peach State's hostile reversal in EV policy.

Last week, Georgia eliminated the state's $5,000 electric car (EV) tax credit---the biggest state-based tax credit in the nation---and replaced it with a $200 annual EV tax (more than drivers of gasoline-powered cars pay). The law, which goes into effect July 1, does so amidst the protests of environmentalists and electric car advocates.

Progressive Solutions Ignored

More lenient, EV-friendly competing solutions had been proposed by a variety of legislators. One plan called for capping the price of vehicles that qualified for the tax credit. For example, a limit of $50,000 would not qualify vehicles like the Tesla Model S and BMW i8, but would cover popular models like the Nissan LEAF, Kia Soul EV, Volkswagen e-Golf, Fiat 500e, and Chevy Volt.

One has to ask oneself: Will this $5,000 increase in the price of EVs in the state of Georgia, plus the $200 per year tax (which will result in thousands of dollars over the life of the vehicle), hurt sales of EVs? Atlanta is currently home to the largest population of Nissan LEAFs in the nation, due largely to the effect of its fat tax credit. When combined with the federal tax credit of $7,500, prospective EV buyers had $12,500 worth of incentive to dump internal combustion cars in favor of zero emission battery tech.

This growth in the number of EVs, of course, helped spur growth of Atlanta's charging station infrastructure, making ownership more pleasant and convenient for drivers. That growth will now be challenged by slower EV sales.

Will Tesla Model S Buyers Care?

Will a prospective Tesla Model S buyer, who is preparing to spend $80,000 to $120,000 on a sporty family sedan, really be discouraged by the fact that their $100,000 car will now cost them $92,500, instead of $87,500?

Buyers of more affordable EVs will find the additional $5,000 in expense harder to swallow. A $33,000 LEAF, for example, will cost $25,500 after the law goes into effect this summer, versus the current $20,500. $5,000 means a lot more to a typical middle class family that purchases a LEAF or Kia Soul EV then it does to someone who plunks down $100,000 on a vehicle of any type.

Will You Still Buy?

But let's not ramble on in theory. Jump in on the comments below. Would you be deterred by a $5,000 increase in the price of your EV---regardless of how much you plan to spend? Do you think this double-penalization of electric car early adopters, who now face an annual tax based simply on the fact that they've chosen to drive an environmentally friendly and economical car, is fair? Will it slow or hurt the expansion of Atlanta's charging infrastructure?

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If this comes to pass it will hit the Leaf the hardest. That has been one of the Leaf's most important sales areas. I will be surprised if it actually goes into effect.

Big mistake Georgia, you just said you'd rather see stinky old pickups and ICE's continue to pollute rather than continue to incentivise the EV. YOU are now raising the stink. It's one thing to reduce or remove the tax credit, which wouldn't stop me, but would others, and then to add insult to injury by taxing $200/ year?? It won't hurt Tesla owners as much as Leaf and other "100 mile" cars. I know you need your road tax, but isn't removing the rebate enough? Go get your money from the big diesel and gas trucks and inefficient cars! You just up a big "Wrong Way" sign for living in the state of Georgia!

This is clearly about politics. College grads take note.