Looking at Electric Vehicle Incentives on The One Year Anniversary of the Inflation Reduction Act
Highland Park, NJ—Exactly one year ago, the Inflation Reduction Act (IRA) was signed into law. This historic law is the most significant investment in climate change ever made by the United States spending $783 billion on energy and climate change issues. In New Jersey, it supercharges previously established New Jersey programs to accelerate the market for electric vehicles (EVs).
The IRA renewed the $7,500 tax credit for the purchase of new EV, which was set to expire at the end of 2022 and added a 30% tax credit for the purchase of used EVs. These federal incentives can be leveraged against New Jersey’s Charge Up NJ program that offers up to $4,000 off the purchase of an EV with an MSRP under $45,000 and a $1,500 rebate to vehicles with an MSRP between $45-55,000. These state rebates are “cash on the hood,” so the amount is deducted right off the purchase price, making it highly convenient for customers. Additionally, there is no sales tax on an EV in New Jersey.
The IRS also provides federal dollars to the states to build a network of fast public chargers on major roadways through the National Electric Vehicle Infrastructure Formula Program (NEVI). New Jersey will receive over $100M over the next four years for this effort. But it is important to note this work was underway several years before IRA was enacted into law thanks to New Jersey’s EV Law. That law mandates fast public chargers on New Jersey’s 42 major roadways. With the Federal Government’s assistance, this will be accomplished even faster!
Still, much work remains. Our state law should be consistent with federal law. For instance, the Charge Up NJ program rules should align with IRA rules with respect to vehicles that are eligible for incentives. Moreover, the Charge Up NJ program has expended its funds prior to the end of the program year every year since its inception, and each year the budget remains flat. Demand for these vehicles is strong which is good news. However, the program needs to be properly resourced to help New Jersey meet its goal of 330,000 registered EVs by the end of 2025. Year over year sales need to increase and so does the program budget, even with the understanding that not every EV sold in New Jersey will be eligible or receive for state incentives.
There is much to like about the IRA. Let’s make sure we make the most of it for New Jersey. “We are in a climate crisis and a huge factor in this crisis is the continued use of emissions-spewing traditional vehicles,” said Pam Frank, CEO of ChargEVC-NJ. “While it is great to see the activity at the federal and state levels to bring EVs into people’s homes, it is disappointing to see the lack of urgency on the part of the government. Widespread and plentiful incentives are necessary to achieve our clean energy goals.”
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ChargEVC-NJ is a not-for-profit coalition of diverse stakeholders that includes retail automotive dealers, utilities, consumer and equity advocates, environmental and labor organizations and technology companies. See www.chargevc.org for more information.