Gordon Chaffin: DC should give you money to buy an e-bike

Let’s talk about tax credits for buying electric vehicles. The U.S. government offers benefits to taxpayers to make electric cars more affordable. Right now, the feds offer a $7,500 non-refundable tax credit to buyers of Battery-Electric Vehicles (BEV, such as Tesla Model 3) and Plug-In Hybrid Electric Vehicles (PHEV, such as Chevy Volt). Those credits have been available with a per-company sales volume cap: $7,500 for the first 200,000 vehicles sold, after which a one-year phaseout provides a $3,750 credit for six months and then $1,875 for the final six months. Tesla and General Motors hit 200K late last year, so Tesla and GM EVs will sell without federal tax credits starting in 2020. Despite beating GM to the BEV market in 2011 with its first-generation Leaf, Nissan still has 70K EVs to sell before hitting the 200K cap.

Many states provide tax incentives related to EVs on top of the federal offering. DC, Maryland and Virginia all have some, including exemptions from toll- and express-lane charges. Many states offer tax rebates for installation of the 220/240V home-charging stations and solar panel installations that tie into home batteries — such as Tesla’s Powerwall, which help lower your home’s electricity burden by pulling from the grid at the cheapest hours of the day (midday and overnight).

There’s been talk in Congress of getting rid of the federal BEV/PHEV tax credit — President Donald Trump’s proposed budget throws it out, and some GOP members want it gone — but there’s enough support among Democrats and Western-state Republicans to keep it in law.

Still, the current tax expenditure scheme isn’t ideal. It has an effect of punishing the faster-moving companies that have proved to be more serious about the transition to electric vehicles. This could be corrected by putting EV credits in an all-company pool, first come, first served. For consumers, the non-refundable federal EV credit has had the effect of subsidizing optional purchases for wealthier families instead of supporting the necessary purchases of middle- and working-class families. This regressivity could be flattened across income brackets by making the EV credit refundable. That’s when a credit’s value pays down your tax bill first with the surplus added to the tax refund.

The problem remains that a middle-class family is much less likely than a more affluent one to be able to buy an EV. If you count 2019’s “affordable” EVs with 200-mile range debuting in America — Hyundai Kona Electric, Kia Niro EV, Kia Soul EV, the aforementioned Leaf Plus and Tesla’s Model 3 Standard Range — you’re talking $35K to $45K when spec-ed out. The same applies to long-in-the-tooth Chevy Bolt and Hyundai Ioniq Electric. This is to say nothing of how public charging networks cluster in urban and high-income areas with charging deserts in between.

While the average new car purchase price of all fuel types in America is $35Kish, the median purchase price when including late-model used vehicles is probably in the $20K-to-$25K range. We’re about two to three years away from an EV sold in America at that price with a 150-to 200-mile range and charging speeds to allow for road trips.

So, is it the right decision for the federal and DC governments to focus limited budget resources on pushing Americans into electric cars, instead of encouraging them to reduce car usage period — especially in their commutes? I don’t think so. I think DC and the IRS should give people money to buy electric bikes. The ones without the braking problems.

Vehicles, especially EVs, are much more expensive than e-bikes, but there’s plenty of financing available for the purchase of a car. An electric bike that could replace a car — serving cargo- and passenger-carrying functions — runs between $2.5K and $5K. That’s a large purchase to make without financing. Ideally, that’s also about the size of a car down payment, but Americans aren’t putting much down on cars these days — and they’re amortizing loans in six- and seven-year periods now. So, an e-bike tax credit of $1K to $2.5K would enable many families to buy high-quality electric bikes — SUV bikes — and reduce from two cars to one car in the garage (or parked on the street).

There’s a chicken-versus-egg problem with sustainable commuting: The 60 percent interested in but concerned about the viability of biking to work are discouraged by the lack of road facilities that look safe — namely protected bikeways. Governments, observing only a few bike commuters, see no reason to invest more in bike lanes and trails. It’s a vicious cycle that leaves individuals and their government making choices that lead to more car commuting.

In DC, city leaders would be wise to spend money to make electric bikes more affordable for residents — ideally through tax rebates. But the infrastructure really is the most important priority. Leaders need to improve multimodal infrastructure so that non-car commutes are more appealing and feasible for greater numbers of people.

DC has a giant bike master plan last updated in 2014, but it includes hardly any protected bike lanes, and it’ll take a decade to complete at the current pace. The city should exponentially expand its funding for the construction of bike facilities. With the creation of an expanded network, making functionally robust electric bikes cheap would make biking to work and the store possible as well as appealing — particularly in contrast to congested roads and high fees for garage parking.

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Gordon Chaffin is a reporter for Street Justice, a daily email newsletter covering transportation and infrastructure throughout the Washington region.