That $7,500 tax credit for electric vehicles is getting a makeover: Starting in January, buyers can apply the credit upfront at the dealership instead of getting the money back when they file their tax returns with the IRS. The goal is to boost sales of EVs, which are still a pretty small share of cars on the road — and more expensive than gas-powered vehicles.

American consumers have two priorities when they’re in the market for a new vehicle, said Stephanie Brinley with S&P Global Mobility. First, they like it to be simple. 

Second, “they have a tendency to focus on a monthly payment, rather than the overall purchase price,” Brinley said. 

Brinley said the instant rebate addresses both of those things. It’s simpler, and because buyers have to borrow thousands less, “it can immediately affect your monthly payment price,” she said.

Upfront incentives like this have a proven track record. Erich Muehlegger, an economist at the University of California, Davis, has compared instant sales tax waivers with tax credits that were worth more but came later. 

“The sales tax waivers had a much larger impact on hybrid vehicle adoption, they were very easy to claim, and they occurred at the time of purchase,” Muehlegger said.

In St. Petersburg, Florida, Greg Soulliere has roughly 30 Chevy Bolts on the lot at his dealership. He expects this program will help move them. 

“You got to wait a long time to get that tax refund, and be able to get it right up front, it’s going to make it a lot more palatable for a lot of customers,” Soulliere said.

EVs will be even more affordable in states with incentives of their own, like Colorado. That’s where Clay Stranger works for RMI, a clean energy think tank. 

“With a $7,500 federal incentive combined with a $5,000 state incentive … we’re looking at close to $13,000 of available tax credit, which really can help pull that cost premium of new electric vehicles down,” Stranger said.

But it’s not just costs that have consumers wary of EVs. Darren Whitehurst with the Texas Automobile Dealers Association said charging infrastructure isn’t there yet — especially in rural areas. 

“If you live in Pecos, Texas, you’re not going to buy an EV because you can’t get to Odessa and back on a charge if you’re running your air conditioner,” Whitehurst said.

He said in Texas, he doubts how much this federal program will shift consumer demand. 

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