Lancer Insurance
Monday, June 24, 2024

Weighing the idea of adding an alternative fuel or electric vehicle (EV) to your fleet, soon or in the future? There’s a lot to consider before you do, but if costs are among your impediments, incentives may sweeten the pot a bit.

Electric Vehicles

Congress and the Biden administration are making it easier—or at least cheaper—to add EVs to your lineup starting in 2023 thanks to the Inflation Reduction Act passed earlier this year. The (updated) Commercial Electric Vehicle and Fuel Cell Electric Vehicle Tax Credit offers incentives up to $40,000 per vehicle for businesses that add these clean cars to their operation after January 1, 2023. And unlike the incentive for personal-use vehicles (Clean Vehicle Tax Credit), this credit has fewer restrictions and more generous allowances.

How it works (via the US Department of Energy): Vehicles with a GVWR below 14,000 lbs. must have a battery capacity of at least seven kilowatt-hours (kWh) and vehicles with a GVWR above 14,000 lbs. must have a battery capacity of at least 15 kWh. The tax credit amount is equal to the lesser of the following amounts:

  • 15 percent of the vehicle purchase price for plug-in hybrid electric vehicles/30 percent of the vehicle purchase price for EVs and FCEVs, OR
  • The incremental cost of the vehicle compared to an equivalent internal combustion engine (ICE) vehicle

Additional information:

  • Max caps are $7,500 for vehicles with a GVWR below 14,000 lbs. and $40,000 for those exceeding 14,000 lbs.
  • Vehicle must be used in the US
  • Cannot be combined with the Clean Vehicle Tax Credit (which is specially for personal use)
  • Credit is set to expire at the end of 2032

Note that many cities and states may also have their own programs, so talk with your accountant or click here to search for additional incentives (federal, state, and local) that may apply to your business—which may even help defray the costs of installing the charging infrastructure in your company’s garage. As always, the devil is in the details, so be sure that you are consulting with a tax professional for maximum benefit. 

You can read more about financing your first EV in the December 2022 issue of Chauffeur Driven.