Electric vehicle sales are down nationwide, mostly due to low gas prices from Saudi Arabian mega-pumping. But nowhere have they hit the floor as badly as in Georgia. Yes, the peach state had been one of the country’s leaders in electric vehicle adoption, with the number two market in the country for Nissan LEAFs.
Why? It was all about a generous state tax credit, as ClimateWire (paywall) reports:
It was the promise of a $5,000 tax credit — one of the highest in the country — that sealed the deal.
Atlanta metro resident Rich Robinson traded in his luxury sports car for a lease on an electric vehicle two years ago. Thousands of others did, too, propelling Georgia to a top EV market.
“The incentive brought us in, and we were hooked,” Robinson said.
Then, the state Legislature eliminated the tax credit completely in July 2015. EV sales plummeted nearly 80 percent. The fallout has offered a cautionary tale for the EV industry struggling to gain traction in the mainstream.
The tax credit was a vestige of a 1998 policy to reduce air pollution in Atlanta by encouraging alternative-fueled vehicles. At that rate, it made leasing a LEAF virtually free, which got under the skin of a Republican legislator. So the legislature killed the incentive completely last summer in a big transportation bill, and also imposed a $200 fee on the vehicles to get them to pay for road use.
Hence, the sales plummet.
Overall, it’s a word of warning for boosters of these emerging clean technologies that killing incentives completely without a phase-out plan can be devastating for their growth. A $2500 tax credit would be much more reasonable, with a slow phase-out through the early 2020s to account for projected price decreases and increased battery range.
EV sales will rebound there as the technology improves, but Georgia’s experience shows how important state policy incentives are to the growth of the market.
In the meantime, let’s hope the fossil fuel devil gets kicked out of Georgia soon, Charlie Daniels style.