Coloradans Should Buy an EV (But Maybe Wait a Few Months)

This post is about Colorado HB23-1272 which has passed the Colorado legislature and is awaiting the Governor’s signature. Like most bills, this one is complex (77 pages long) and filled with legislative and legal jargon. As a result, the following is my current interpretation of some of the provisions in this bill but it is very possible (likely?) that at least some of what I write below will be incorrect (or at least un-nuanced). If I later discover corrections, I will come back and amend the post. But I wanted to go ahead and write the post now because some of the information is time sensitive and could save folks several thousand dollars if they know now versus when we get complete clarity on the bill.

I’ve written before about taking advantage of the enhanced federal EV tax credit and the fact that many states (including Colorado) have additional state incentives. Well, for Colorado folks, those incentives just got even better with the passage of HB23-1272 (awaiting the governor’s signature). As I indicated above, some of the following may not be completely accurate, but I think it’s likely close, so I wanted to get this information out there because of the time-sensitive nature of part of it.

The most immediate time-sensitive nature (and what the blog post title refers to) is that these new, enhanced Colorado incentives don’t start until July 1, 2023 and then more begin on January 1, 2024. This means that if you purchase a new EV between now and July 1st, 2023 you will still get the old incentive (which is good, but not as good). And if you purchase an EV priced below $35,000 between July 1st, 2023 and January 1, 2024, you will also lose out on an additional incentive. So, for many folks in Colorado, if you are considering purchasing a new EV you will definitely want to wait until July 1st and possibly until next January in order to optimize the incentives available to you.

So, let’s start with the existing Colorado incentives that are still in place from now until July 1st, 2023. For any EV car purchased before July 1st, you will receive a $2,000 Colorado tax credit. But, beginning on July 1st, that incentive increases for a while, and then decreases over time. Here’s a handy table that should help:

So, that means starting July 1st, the Colorado tax incentive for an EV car increases to $5,000 (or $3,000 more than today, which is why you might want to wait a few months). Please keep in mind that this is in addition to the federal incentive of up to $7,500 as detailed in my previous post.

Note: There is a cap on MSRP of $80,000 for all cars in order to qualify for the incentive. There are also some possible restrictions on the total amount of dollars available for credits in the later years (2026 and beyond) based on future state revenue numbers.

But it potentially gets even better because, beginning January 1, 2024, there is an additional Colorado incentive of $2,500 for any EV car with an MSRP below $35,000. Here’s a handy table for what that looks like:

I’ve bolded the word “car” because “trucks” are treated slightly differently. The current incentive for light trucks apparently continues through December 31st, 2023, and is $2,800 for light-duty electric trucks, $4,000 for medium-duty, and $8,000 for heavy duty. I’m not sure why this doesn’t transition to the new incentives on July 1st like it does for cars and I sorta suspect that for light-duty trucks it might, but the wording of the bill seems to contradict that (the table on page 12 of the bill says 1/1/24). Starting January 1, 2024, here are the tables for trucks:

So, let’s take a look at some of the EVs available today. (Many more models will become available over the next 12-36 months, and more will begin to qualify for the federal $7,500 incentive, but we don’t know when and what they will cost.) This is what the ones available today would cost a Colorado resident beginning July 1st, 2023 and then through 2026 (assuming the MSRP remained the same as today).

So beginning July 1st the Chevy Bolt will only cost between $13,000 and $23,000! Unfortunately, Chevy is discontinuing the Bolt but is supposed to be replacing it with the Equinox EV in roughly the same price range, so hopefully those will be available by the end of 2023. If so, and if they are in the same price range as the current Bolt, then in 2024 you might be able to get a new one for between $11,000 and $20,000!

The Volkswagen ID4 comes in many different configurations, but starting July 1st you could pay anywhere between $26,000 and $43,000 for a great car. The Ford Mach E only qualifies for $3,750 in federal credits right now, but it is also a great car. And, while more expensive, the Ford F-150 Lightning is making truck people very, very happy, and when you can lower the price by this much, they’ll be even happier.

Beginning July 1st you can get a Tesla Model 3 ($3,750 federal incentive for RWD and AWD, $7,500 for Performance) for between $31,000 and $41,000 and a Tesla Model Y between $35,000 and $42,000. Tesla is also working on their “next-gen” vehicle that is supposedly a bit smaller than a Model 3 and they are hoping to hit a $25,000 price point. Nobody knows for sure, but my best guess is that it might start achieving limited production by the end of 2024. If it did, and if you were able to get one of those first orders in the $25,000 to $35,000 price range, you might be able to get one (in Colorado, in 2024) for between $10,000 and $20,000! It’s more likely that you might be able to get it in 2025, in which case it would go up to $12,000 to $22,000, but still.

And, of course, don’t forget the lower total cost of ownership of all of these EVs going forward when comparing to an ICE vehicle. And those ICE vehicles will depreciate much faster, and especially so when they begin to become “stranded assets” toward the end of this decade. It’s even better if you have (or get) solar panels on your roof, as “fuel” then becomes “sun-cheap” and provides an amazing hedge against inflation.

There are additional incentives in the bill, including $450 for e-bikes (starts April 1, 2024), 10% off heat pumps and heat pump water heaters (this is in addition to federal incentives), and some incentives for businesses including heating buildings with heat pumps and/or geothermal as well as sustainable aviation fuel production. Again, it’s possible I haven’t interpreted everything correctly (or have missed something), so I’ll come back and revise if necessary. But, in the meantime, if you’re considering a new car, you should really, really, really think about an EV and when the best time is to purchase your choice.

Note: Colorado’s incentives apply to all EVs, not just the ones that qualify for the Federal tax incentive which has assembly and battery sourcing requirements. Obviously, the best bang for your buck is to get one that also gets the Federal incentive, but if you are interested in others, the Colorado incentive will still apply.

Update June 2, 2023: All Model 3’s now qualify for the $7,500 federal tax incentive, so subtract another $3,750 from above. Here’s the new table:

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s