With Electric Car Incentives Gone, Electric Car Registrations in State of Georgia Plummet

Ask most folks on the street to name states with the highest electric car sales figures in the union and the chances are they’ll place California at the top of the list, followed by other west-coast states like Oregon and Washington State, and the handful of traditionally liberal states along the northern portion of the east coast such as New Hampshire, Maine, Massachusetts, New York, Maryland and the District of Columbia.

But as many electric car advocates will tell you, the southern state of Georgia was for many years, an unlikely contender at the top of the list of EV-friendly states, thanks to a generous $5,000 in state tax credits for each and every new electric car purchased in the state. Applied in concert with the $7,500 Federal income tax credit, Georgia’s incentives reduced the effective price of a new electric car by a massive $12,500, making EVs a no-brainer — especially in the state’s capital city of Atlanta, where Nissan LEAF sales topped those in other U.S. cities month after month.

Plug-in sales in GA have fallen off a cliff. Image: Watchdog.org

Plug-in sales in GA have fallen off a cliff. Image: Watchdog.org

You’ll note we used the past tense, because that’s no-longer the case. Earlier this year, despite previous attempts to do so were thwarted, the Georgian legislature voted 29 to 25 with 2 excused to pass the Transportation Funding Act of 2015, a bill which included a clause ending the $5,000 state tax credit for electric cars and replacing it with a $200 annual registration fee instead. It was followed a week later with the passing of a bill to grant employees of Mercedes-Benz an exemption to paying state car tax on cars leased through the company.

At the time, we and other news sites warned that the elimination of the credit would no doubt affect sales. Now, we’re able to quantify just how badly the tax credit cuts are impacting sales: a lot.

As Watchdog.org reported last week, since the tax credit expired on July 1, the state of Georgia experienced a massive 88.9 percent drop in plug-in car sales between June and August alone, with just 148 plug-in cars registered in August compared to 1,338 in June.  Using figures from automotive information company R.L. Polk & Co., the governmental watchdog concludes that the end of the electric car tax credits in Georgia spell bad news for plug-in fans.

"GeorgiaCapitolBuilding" by w:en:User:Autiger - w:en:Image:GeorgiaCapitolBuilding.jpg. Licensed under CC BY-SA 2.0 via Wikimedia Commons.

“GeorgiaCapitolBuilding” by w:en:User:Autiger – w:en:Image:GeorgiaCapitolBuilding.jpg. Licensed under CC BY-SA 2.0 via Wikimedia Commons.

Before we go any further however, we feel it’s important to note a few things about the dataset. Firstly, it lists both all-electric and plug-in hybrid vehicles. While attempts were made to change the tax credit so that it applied to both plug-in hybrids and electric vehicles, it’s worth noting that the tax credit which ended on July 1 pertained only to 100% electric vehicles. Plug-in hybrids weren’t eligible for the tax credit, which is one reason why sales of models like the Chevrolet Volt, Ford C-Max Energi, Ford Fusion Energi and Toyota Prius Plug-in hybrid remain reasonably constant throughout the sample period.

It’s also worth noting — beyond the headline figure of 88.9 percent drop in plug-in car sales — that June’s figure are obviously inflated as buyers scramble to take advantage of electric car incentives before the July deadline. Taken nationally too, it’s worth remembering that sales during July and August were somewhat subdued on pre-summer figures, driven in part by consumers taking vacations rather than shopping for a new car.

With those caveats in mind however, there’s still a massive drop in sales for Georgia which far exceeds any seasonal variation.

If we take the mean sales figure of plug-in vehicles from the month of January through April — the months before the true effects of HB 170 were felt by car buyers — we’re left with an average of 738 plug-in sales per month.

Sales of everything from the Nissan LEAF to Tesla Model S and BMW i3 suffered.

Sales of everything from the Nissan LEAF to Tesla Model S and BMW i3 suffered.

That’s a little lower than the seemingly healthy 776 vehicles sold during July, the month after the tax credit ended, but nearly five-times the amount of sales recorded during August. The biggest casualties? Nissan’s all-electric LEAF hatchback, the Tesla Model S, and the BMW i3.

During the first four months of the year, Nissan sold an average of 338 LEAFs per month, peaking at 1,029 LEAFs in May and 1,008 LEAFs in June. Sales during July fell by almost a half on June’s high point, dropping to just 66 cars during August. Similarly, Model S sales fell from a four-monthly average of 65 cars at the start of the year to just 29 cars in August. BMW i3 sales fell from a four-monthly average of 42 cars per month to just 13.

What of the seemingly still high figures for July? While we’ve no data to confirm exactly what’s going on here, we’d hazard a guess that high demand for cars during May and June resulted in a substantial wait time for cars, with at least some of the cars registered in July actually ordered during May or June, before the tax credit expired. Those 776 plug-in cars registered in July are likely a majority of unlucky customers who essentially missed the boat and found themselves paying $5,000 more than they’d expected to.

With the Peach State now certainly off the top ten lists for electric car sales, advocates and manufacturers alike are no doubt frustrated by the Georgia’s brutal about-turn on plug-in vehicles.

State Rep. Chuck Martin (R-Alpharetta) meanwhile — the representative behind the original drive to end the tax credits — stands by the bill he helped craft.

“I thought the credit turned from an incentive into a virtual entitlement,” he told Watchdog. “It was essentially taking money that would have been paid into taxes in Georgia and a subset of people were getting their car paid for.”

Benita Dodd, vice president of the Georgia Public Policy Foundation, agreed. Talking to Watchdog, Dodd argued that it wasn’t the place of government to offer incentives to private industries.

“That’s social engineering,” Dodd said. “A lot of Nissan Leafs are on the road [in Georgia] because of this subsidy, but people are supposed to be driving electric cars because they’re supposed to be more environmentally responsible. So if you’re that concerned about the environment, then why not pay full price for what you’re getting?”

But, says Don Francis of Clean Cities-Georgia Coalition, the subsidy was essential. “[It] was an economic benefit to the state, it was an environmental benefit to the state, it helped jobs because all of a sudden we had people putting in charging stations and things like that,” he said. “And all of that was taken away in one fell swoop.”

“The people who are losing out now are middle-income folks who were beginning to buy the vehicles,” Francis continued. “They first hit on it because of the cost, but after they got the vehicle it spread by word of mouth … We were just starting to see that transition.”

With a new legislative session starting in January, Francis and others who are supportive of electric car incentives are hopeful a new bill can be introduced to the house in order to reinstate incentives — perhaps with plug-in hybrids included — to ensure the good work done by the state since 1998 to encourage electric vehicle adoption isn’t destroyed overnight.

But without hard work from all parties concerned, Georgia’s golden years with plug-in vehicles could be over forever.

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  • Holy crap, that registration fee is like a gas tax of 62¢ a gallon @ 31 mpg. o-o

    • vdiv

      Yeah setting an annual $200 fee is an in-your-face punitive action that should be challenged in court. If it’s OK for electric to pay why shouldn’t all vehicles pay it?

  • bathbun

    Pity the legislature did not taper the tax credit reduction over a couple of years. Would have been fairer to people who apply late and smooth out the effect on the market.

  • Farmer_Dave

    Dodd: “people are supposed to be driving electric cars because they’re supposed to be more environmentally responsible. So if you’re that concerned about the environment” [read: I’m not].

    “Dodd argued that it wasn’t the place of government to offer incentives to private industries.” No mention about the subsidies to Big Oil.

    This is what happens when you vote (R) or don’t vote.

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