This post, part of a series we're running all about electric cars, was written by Jamie Page Deaton from HowStuffWorks.com.
Compared to gasoline-powered cars, electric cars have higher up-front costs. So, while electric cars are cheaper to operate, it can feel like you need a rich uncle to help you buy your own electric car. As it turns out, you've got one: He's your Uncle Sam.
The federal government, as well as some local governments, offers a number of incentives to encourage people to buy electric cars. Most incentives are tax credits. The amount of the credit depends on how much energy the car's battery can store, but the minimum credit is $2,500, which is a pretty healthy chunk of change. If you get a car that can store up to up 16 kilowatt hours or more of electricity, the credit rises to the maximum level: $7,500 dollars.
There are a few qualifications beyond battery capacity. You have to buy the car and use it yourself -- in other words, you can't buy an electric car and resell it to claim the tax credit. Also, it has to be a new electric car. If you buy one used, you won't get the tax credit. Also, the credit won't last forever. It only applies to the first 200,000 plug-in vehicles a manufacturer makes. But, because the credit applies to cars that can be plugged in, plug-in hybrids are eligible, as are all-electric cars.
The incentives are good news for consumers, but they're also good news for car makers who are behind much of the push for electric car incentives. When buying an electric car, make sure you read the fine print: many car makers are advertising electric cars with the price after the tax savings. For example, Nissan advertises its new Nissan LEAF price as "as low as $25,280" but that number comes after tax savings. The actual manufacturer's suggested retail price (MSRP) on the Leaf is $32,780. When it comes to buying an electric car, the MSRP is the number that lenders will use to make their loans -- so you'll need to be able to afford the full $32,780 and then apply your tax savings to the loan at a later time.
Still, what can amount to a $7,500 discount on an all-new, ground-breaking car is a good deal. Just remember to write your Uncle Sam a thank-you note.