Call a clean vehicle whatever you like- a hybrid, plug-in hybrid (PHEV), or electric vehicle (EV). These cars are steadily gaining market share. Luckily for you, our very own government wants to make sure you get in on the trend and purchase a clean vehicle.
Our journey to purchasing a new clean vehicle for less than $8,000 started with a totally unrelated check of our solar true-up bill. On our electric utility’s website was a harmless (or so I thought) link to an EV (electric vehicle) savings and incentives calculator.
I took the bait.
After personalizing the incentives by adding my zip code, family size, and income, I was shown a HUGE number, somewhere north of $20,000, in incentives that we MIGHT be eligible for. Of course, I am a practical person that realizes “if it’s too good to be true, then it probably is.” But, I’ll admit I was still rather curious.
I wrote down every incentive and started checking. I visited all the websites, read through all the requirements, and crossed a few off my list. When I was done, I sat down and looked at the REAL dollar amount in incentives.
An estimated $17,000!
Come again???
It sounded insane!!! Would all these government agencies and programs really give me that much money to purchase a new clean vehicle!?!
I decided there was only one way to find out. I started the arduous task of applying.
And let me make this very, very clear: the paperwork and hoops you have to jump through to actually get the cash are very taxing. And for some rebates, it literally took months for the paperwork to be processed.
Incentives Eventually Paid
In the end, we had to wait for our federal taxes to be done to know how much money we would get You see, the federal tax credit is not refundable, meaning we only got credit for what our tax liability was. Instead of the full $7,500 tax credit, we ended up with $6,798. Okay, I’m NOT complaining! I’m just clarifying! Besides, we knew beforehand that we would probably be a few hundred away from the full credit.
We ended up buying our vehicle on December 8th, 2020. Here is the breakdown of incentives that were actually PAID (from greatest to least):
Yep! In the end, we were given $17,598 to purchase a new clean vehicle.
Now that you know how much money we were actually given, want to know specifics? Keep reading…
Clean Vehicle Rebates/Incentives
1. Federal Income Tax Credit
The federal government will zero out up to $7500 of your tax bill if you purchase an eligible clean vehicle. And of course, every dealership in the country that sells electric cars knows about this guy. The problem? You have to actually have a tax bill to get this credit. The other problem? When car manufacturers sell over 200,000 eligible vehicles, this credit starts to disappear. We steered clear of the Chevy Bolt for this exact reason. The credit for the Bolt was much lower than $7500.
In the end, our tax liability was only $6798. (Okay, if you look at our taxes, it shows we got the full $7500. However, the $7500 also affected some other tax credits. To find out how much it really changed our taxes we put this credit in at the VERY end and saw how much our refund increased.) That’s still a chunk of change. We also had to wait for our taxes to be done to get this money. Thankfully, since we bought at the end of 2020, we were able to do our 2020 taxes just a few months later. But, if we had bought in January 2021 for instance, we would be waiting over a year for this money to materialize.
2.Clean Vehicle Assistance Program-grant
We live in California, so we looked for state-wide incentives. There were two that were available to us.
The first was a grant that could be used as a down payment. That grant came through the Clean Vehicle Assistance Program. This program helps people purchase a clean vehicle by giving grants up to $5000. The main qualifications basically are 1) Be a California resident, and 2) Have income below a certain threshold. Although, there are a few other more minor requirements, such as completing a lengthy application, watching some videos, waiting FOREVER for approval, and using only approved dealers (a definite PAIN). The real deal-killer is the income. But, we were pleasantly surprised by how generous the income limits were. They have increased a little since we purchased our car in 2020, but as of 2021, here are the limits:
A family of four can earn a six-figure income and still qualify! How about that? We were well below our threshold for a family of seven.
Ultimately, we chose a plug-in hybrid instead of a fully electric car, so our grant amount was reduced to $4500. That’s a nice down payment in exchange for some paperwork (oh, and WAITING for approval)!
NOTE: One of the best benefits of going through this program was the ability to get a home charger and installation for FREE. Yes, you can plug your electric vehicle directly into a wall outlet, but it takes over 10 hours for our car to charge enough to go 47 miles on electric power. Get what is called a level 2 charger, and we can plug our car in for 2 hours and go 47 miles on battery power. It’s the only way an electric vehicle makes any sense to us.
3. Clean Vehicle Rebate Project
The Clean Vehicle Rebate Project is a better known, more user-friendly program compared with the Clean Vehicle Assistance Program. Basically, just buy an eligible car and submit the paperwork to receive a rebate check in the mail (although usually MONTHS later). Fully electric cars get $2000, while our plug-in hybrid qualified for $1000. But WAIT! We have seven people in our household. There is such a thing as “Increased Rebate” amounts. Currently, if you meet income guidelines, you get an ADDITIONAL $2500.
Now, that sounds a whole lot better! Here are the income limits for 2021:
Think these numbers look familiar? That’s because both the CLean Vehicle Assitance Program and the Clean Vehicle Rebate Project base the income guidelines on 400% of the federal poverty level. So we happily qualified for the increased rebate amount. That put our total rebate check at $3500.
4. Air District Rebate
The next check came from our local air district. Honestly, before this whole clean vehicle thing, I didn’t even know such things as air districts even existed. Well, they do throughout California! Our local district offered us $2000 to switch to a clean vehicle.
This was the easiest check we got. It was a short application, along with proof of our purchase, and that was that. They were also very quick to send the money. $2000 was ours!
5. Utility Rebate (now clean fuel reward)
In an apparent effort to help out with the increased electric bill that comes with an electric vehicle, our utility was offering an $800 rebate. This was only good through the end of December 2020, so we just barely caught this one. It was also super easy to apply for and super quick to get the funds.
*Update: In 2021, most utilities stopped giving rebates in exchange for supporting the Clean Fuel Reward program that gives an immediate $1500 off the price of a new clean vehicle.
Total Cost
After over $17,000 in rebates, credits, and incentives (whatever you want to call them), how much did we pay for a new car???
Well, after what seemed like an endless search to find the best price, we finally settled on a dealer through TrueCar. We also tried some other programs, like Costco and CarGurus, but in our experience, TrueCar had the best prices. (We have now purchased two vehicles through this website and got great deals on both. I don’t know about used cars, but for our new cars, we were very pleased.)
We found a 2020 Honda Clarity for over $8,000 below MSRP. It certainly helped that we were purchasing a 2020 model while 2021 models were showing up on dealer lots.
There it is! For just under $8,000, we sold our old 2005 minivan that always seemed to be in need of repairs and upgraded to a very nice car. Our Clarity loves to skip the pump and, so far, has needed virtually no maintenance (it did have me change the oil somewhere around 12,000 miles as well as tire rotations). Between lower fuel and maintenance costs, it has already saved us not only worry but quite a few benjamins! (You can see our fuel/transportation costs here.)
Although the paperwork was a bit time-consuming and more than a little irritating, we were so pleased with the final outcome that my husband applied for most of the same rebates about 2.5 months later and we bought another clean vehicle. The second time around we replaced a 2014 Dodge Caravan with a 2021 Chrysler Pacifica Hybrid.
Who knew free money could be so much fun?
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