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Electric car sales hit the brakes as tax credit axed and fee added
The Georgia General Assembly earlier this year pulled the plug on one of the nation’s most generous state tax credits for electric cars.
At the same time, state lawmakers voted to impose a $200 annual registration fee on owners of some plug-in hybrids and all zero-emissions vehicles to make up for the gas taxes those motorists don’t pay and to help fund a backlog of road projects.
Both changes took effect July 1, and already, preliminary numbers show sales of the Nissan Leaf and other electric cars are plummeting, Don Francis, coordinator of the Clean Cities-Georgia Coalition, said in an interview published Oct. 28 at Watchdog.org.
New electric car registrations in Georgia fell 89 percent from 1,338 in June, the last month that the tax credit was available, to 148 in August, Francis said.
Sound surprising? Maybe not.
True? PolitiFact decided to dig deeper.
First, we’ll provide some background.
Georgia started providing a tax credit for electric car purchases in 1998. Initially, businesses and individuals were offered a tax credit up to $1,500 as incentive to buy alternative-fuel vehicles. Two years later, the credit was upped to $2,500 for all low-emission vehicles, and in 2001, it was doubled to $5,000 for zero-emission vehicles. By comparison, Louisiana and Maryland offer a credit up to $3,000, and Utah gives up to $1,500. All three states limit the tax credit to vehicle purchases.
Georgia’s $5,000 credit meant huge savings for state residents who wanted to buy or even lease an electric car -- especially when coupled with a federal tax credit that could be as much as $7,500, depending on the capacity of the vehicle’s battery.
Those who wanted to get rid of the tax credit said that the double tax credits were excessive and allowing Atlanta yuppies to lease electric cars, including the $30,000 Leaf, for as little as $100 a month.
Supporters said the tax credit made Georgia one of the top states for electric cars, a positive step especially in metro Atlanta where air pollution from auto emissions has been a persistent problem.
Statewide, electric car ownership has jumped dramatically just in the past couple of years..
According to the state Revenue Department, 1,743 electric cars were riding the roads of Georgia in 2012. By 2014, that number had soared to 15,729, or an increase of 802 percent, with two-thirds of them parking outside homes in metro Atlanta’s four biggest counties -- Fulton (4,288), Cobb (2,397), Gwinnett (2,087) and DeKalb (2,067).
Proposals to eliminate the tax credit went nowhere in 2013 and 2014. But in this year’s legislative session, when raising $1 billion for transportation projects was a priority, budget analysts said cutting the tax credit for electric cars would bring in $66 million by 2016 and nearly $190 million by 2020.
Supporters of the tax credit touted a private study that said, without the tax credit, Georgia’s economy would lose $252 million in the next 16 years.
What the numbers say
We began our fact check by contacting Francis, who opposed abolishing the state tax credit during this year’s General Assembly session.
Francis shared with PolitiFact a spreadsheet that he developed based on motor vehicle data he obtained from a national automotive information company.
The data showed a spike in Georgia’s electric car sales in the months between when lawmakers voted to kill the tax credit and when it officially expired July 1.
Sales declined sharply in July, going from 1,338 in June to 776, and fell even more, to 149, in August, the last month for which data are available, Francis said.
"When you were selling an average of just over 1,000 (cars) a month and then it goes to 150 a month, you have to say: ‘What changed?’" Francis said. "Two things changed: The tax credit went away, and the $200 fee was added."
We contacted officials at IHS Automotive, the company where Francis received the data used in the spreadsheet, and asked it to review the accuracy of his information.
Michelle Culver, senior manager for corporate communications at IHS, said via an email that "we did a spot check on this, and it is our data and accurate."
We also decided to find out what the Georgia Department of Revenue, the agency in charge of vehicle registrations in the state, was seeing.
William Gaston, the department’s spokesman, sent us data on new car sales, rather than new car registrations. The reason, he said, was an owner could register a vehicle after July 1 but have purchased it before the deadline and thus qualify for the tax credit.
Revenue Department numbers and Francis’ data brought us to the same conclusion -- sales of electric cars have done a nosedive.
Specifically, Georgians purchased 5,434 zero-emissions vehicles -- or an average of 905 a month -- from Jan. 1 to June 30 of this year, when the $5,000 tax credit was available.
Between July 1 and Sept. 30 -- when the state tax credit was no longer available -- 439 electric cars were sold, or about 149 per month.
Don Francis, coordinator of the Clean Cities-Georgia Coalition, said electric car sales in Georgia have dropped dramatically since a $5,000 tax credit was eliminated and a $200 annual registration fee was imposed July 1.
That statement is backed up by data available so far on new car registrations and new car sales.
Keep in mind that car sales spiked as people rushed to buy before the credit expired July 1, and that makes the post-July 1 drop in sales look that much more shocking.
Whether that trend holds remains to be seen.
But everything we found so far indicates Francis is on the money. We therefore rate his statement as True.
"Without state subsidies, electric car sales in Georgia crash," By Rob Nikolewski, Watchdog.org, Oct. 28, 2015
Phone interviews and emails with Don Francis, coordinator of the Clean Cities-Georgia Coalition
Phone interviews and emails with William Gaston, spokesman for the Georgia Department of Revenue
"Bill would nix consumers' tax break on electric vehicles but simliar credit for business remains," April Hunt, The Atlanta Journal-Constitution, March 16, 2015
We attempted to contact four dealers, all either did not return calls or would not comment for the record.
"Transportation bill could stall electric vehicle sales," By Urvaksh Karkaria, Atlanta Business Chronicle, March 27, 2015
"Bill would unplug Ga.’s electric-car tax credit," Andria Simmons , The Atlanta Journal-Constitution, March 4, 2015
"New Study: Eliminating Georgia’s Zero Emission Vehicle Tax Credit Would Cost State More than $250 Million in Future GDP," Securing America’s Future Energy, February 11, 2015
"Bill would unplug Ga.’s electric-car tax credit," By Andria Simmons, The Atlanta Journal-Constitution, March 4, 2015
From the Georgia Department of Revenue
Number of vehicles that were purchased between 01/01/2015 and 06/30/2015.
Number of vehicles that were purchased between 07/01/2015 and 09/30/2015.
Note: ZEV is Zero Emissions Vehicles; LEV is Low Emissions Vehicles The ZEVs are the ones that were eligible for the $5,000 tax credit.
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