Electric Vehicle (EV) Incentives: The Perks of Driving an EV

As the world continues to move towards cleaner and greener energy, electric vehicles (EVs) have emerged as a popular alternative to gas-powered cars. EVs are becoming increasingly popular due to their numerous benefits, ranging from reduced greenhouse gas emissions to lower fuel and maintenance costs. As a result, many individuals are considering making the switch from a gas-powered car to an EV.

With so many factors to consider when purchasing a new vehicle, it can be challenging to know where to start. In this article, we will explore the various incentives of owning and driving an EV, and why individuals should choose to drive an EV over a gas-powered car. We will also break down the federal incentives available in both Canada and the United States of America for EV drivers. By the end of this article, you will have a better understanding of the benefits of driving an EV and why it may be the right choice for you.

What Are EV Incentives?

Governments in both Canada and the U.S. offer incentives for EVs to support policy-driven adoption of EVs worldwide, as we transition to renewable energy. These incentives can take various forms, such as tax credits, rebates, and grants, and are designed to offset the higher upfront costs of EVs and make them more accessible to the public to help reduce the number of gas-powered vehicles on the road. For example, Canada has already committed to banning the sale of fuel-burning new cars and light-duty trucks by 2035, as the country aims to reach net-zero emissions by 2050, meaning only zero-emissions cars and trucks can be sold from 2035 onwards. At the time this article was written, the United States had not yet fixed a date to ban the sale of gas-powered cars and trucks.

Federal EV Incentives in the United States

In the United States, there are federal incentives available for EVs in the form of federal tax credits. The federal government offers a one-time tax credit of up to $7,500 for the purchase or lease of a new EV. The list of eligible EVs is constantly updated and you can find the list of current eligible vehicles here. The credit amount depends on the battery size and the vehicle’s range.

It’s important to note that this tax credit is not a direct rebate or cash payment, but rather a reduction in the amount of income tax owed to the federal government.

It’s also worth noting that the federal EV tax credit has a phase-out period for each automaker. Once an automaker has sold 200,000 qualifying EVs in the United States, the tax credit begins to phase out. For example, Tesla and General Motors have already reached this threshold, so the tax credit is no longer available for their vehicles. Other manufacturers, such as Ford and Nissan, are getting close to the phase-out limit, so the amount of the tax credit is decreasing over time.

The U.S. Department of Energy recently released important information about the availability of the clean vehicle tax credit, which is as follows:

• If you purchased a qualifying electric vehicle on or before August 16, 2022, and placed it in service before January 1, 2023, you may claim the electric vehicle credit indicated in the table below if (a) your vehicle qualifies and (b) the credit has not phased out for the vehicle’s manufacturer. For vehicles sold by manufacturers that have reached their sales cap, the phaseout period and credit amounts are indicated below.
• If you purchased and took possession of a qualifying electric vehicle after August 16, 2022, and before January 1, 2023, you may claim the credit indicated in the table below if final assembly of the vehicle occurred in North America. To determine if final assembly of your vehicle occurred in North America, visit Electric Vehicles with Final Assembly in North America (Vehicles Purchased Between August 17 and December 31, 2022).¹

State and Local Government EV Incentives

In addition to the federal tax credit, some states and local governments also offer their own incentives for EVs. These incentives can take many forms, such as rebates, tax credits, reduced vehicle registration fees, and free or discounted access to public charging stations. These incentives vary by location and may have different eligibility requirements and limitations. ElectricForAll, a nonprofit organization that educates the public on EV technology has a great resource that allows you to search for incentives available in your area.

Federal EV Incentives in Canada 

Back in 2019, to help curb emissions, the Federal Government of Canada launched an incentive program targeted at EV/PHEVs called the Incentives for Zero-Emission Vehicles (iZEV) Program. The list of eligible vehicles is constantly updated, for the most up-to-date information on eligibility please visit the Transport Canada page. In 2022, the Federal Government updated the program with additional funding that will last until 2025.

Incentives for Zero-Emission Vehicles (iZEV) Program

The iZEV Program offers different incentives for various makes and models of eligible zero-emission vehicles for purchase or lease. The Federal Government offers a rebate of up to $5,000 for eligible EVs, and an additional rebate of up to $2,500 for eligible vehicles with seven or more seats. These rebates are available for both new and used EVs and are based on the battery size and range of the vehicle.

For medium and heavy-duty zero-emissions vehicles the Government of Canada has a separate program, the Incentives for Medium- and Heavy-Duty Zero-Emissions Vehicles (iMHZEV) Program, that was launched on July 11^th, 2022. The list of eligible zero-emissions vehicles is available here, and the iMHZEV program provides eligible purchasing/leasing organizations with iMHZEV Program incentives of up to $200,000.

The government also offers a Zero-Emission Vehicle (ZEV) Infrastructure Program, which provides funding to build and expand EV charging stations across the country to support the rising demand of EVs across the country. The release of the 2023 Federal Canadian budget highlighted significant additional incentives, which we’ll cover in a future post.

How do we keep the ev momentum going?

As we’ve explored in this guide, EVs offer many incentives for individuals looking to purchase or lease a new car. Additionally, various federal incentives, such as tax credits and rebates, have made EVs more accessible to the public in both Canada and the U.S.

However, as more people make the switch to EVs, it’s becoming increasingly clear that we need to invest in charging infrastructure on a wide scale. EVs require access to reliable and convenient charging stations, whether at home, at work, or on the go. Without adequate EV charging infrastructure, adoption may stall, limiting the potential benefits to the environment and the economy.

Fortunately, many governments, automakers, and private companies are already investing in charging infrastructure to support the increased demand for EVs. As mentioned, Canada’s federal government ZEV Infrastructure Program, provides funding to build and expand EV charging stations across the country. In the US, the Biden administration has proposed a $174 billion investment in electric vehicles and charging infrastructure².

Investing in charging infrastructure is crucial to support the transition to a cleaner and more sustainable transportation system. With the right infrastructure in place, EVs have the potential to transform the way we travel and reduce our impact on the environment, as we itch towards the goal of net zero by 2050.

^{1 https://www.fueleconomy.gov/feg/taxevb.shtml}

^{2 https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/14/fact-sheet-president-bidens-economic-plan-drives-americas-electric-vehicle-manufacturing-boom/}