State incentives for electric vehicles are on hold until at least next July after Vermont missed out on a federal grant that would have provided $20 million in state subsidies for the purchase of zero-emission cars.
In 2022, lawmakers allocated $18 million in state funds for EV incentive programs that were supposed to last through July of 2025. Higher-than-expected demand for those subsidies has depleted funds for the state programs. And the federal Environmental Protection Agency grant that lawmakers and administration officials had been counting on to keep the incentives going was denied earlier this summer.
“We weren’t successful in that state application, and so there was no other funding source to continue these programs,” said Patrick Murphy, state policy director at the Vermont Agency of Transportation. “It’s certainly a disappointment, because our programs were really tailored towards folks who were least able to make that transition.”
Vermont has three state-level incentive programs that provide up to $5,000 toward the lease or purchase of new and used EVs for income-eligible residents.
We have here a rare situation where exhausting public funds as quickly as possible is actually a good thing, because it means the programs are working.Patrick Murphy, state policy director for Vermont Agency of Transportation
Washington County Sen. Andrew Perchlik said those programs have been a critical tool in helping the state reduce carbon emissions from its transportation sector. He worries the closure of those programs could depress EV sales as Vermont prepares for a clean-car rule that will require 35% of all new cars shipped to auto dealers in the state to be zero-emission starting in 2026.
“We wanted to be able to ramp up the market so that we can meet those targets,” Perchlik said. “I don’t know if we’re ramping up fast enough, and then if the incentives are running out, if we’ll be able to ramp up as fast as those rules call for, unfortunately.”
The fact that funding for EV incentives has dried up sooner than policymakers anticipated, according to Murphy, shows how popular they’ve been with consumers.
“We have here a rare situation where exhausting public funds as quickly as possible is actually a good thing, because it means the programs are working, that Vermonters are interested in buying EVs and then reducing their emissions from the transportation sector,” he said.
Murphy said he can’t speak to ongoing budget deliberations related to Vermont’s next state budget, but he said replenishing funding for EV incentives will be an important conversation. More than 40% of the EVs sold in Vermont in recent years, according to Murphy, have involved state-level incentives.
“I’m sure this will be a discussion next year when the Legislature returns in January, because it’s been key piece of the climate action plan and our progress that we’ve made in the last several years,” he said.
Dave Roberts, with Drive Electric Vermont, said Vermonters are still eligible for federal incentives that can provide up to $7,500 toward the purchase of EVs. He said utilities also offer rebates that can help bring down the cost of the vehicles.
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