Martin Grohman of Biddeford purchased a used 2016 Tesla, shown here, but recently upgraded to a new model. Shawn Patrick Ouellette/Staff Photographer

Last spring, Jon Hinck decided it was time for a new car.

The former Portland city councilor and state representative had been driving “Dimples,” his daughter’s 2016 Nissan Altima, which had been damaged in a hail storm. He did some research, crunched the numbers and decided on the all-electric Hyundai Ioniq.

The purchase would be a big financial commitment, but it was the right thing for the environment, he decided. Plus, he figured an electric car would be fun to drive. Hinck added his name to the waitlist at Rowe Hyundai in Westbrook.

He’s still waiting, almost a year later. The dealership can’t say when his car might come in.

“I made that leap, but they weren’t ready for me,” Hinck said.

Electric vehicles are becoming more popular, thanks in part to state and federal tax incentives and rebates. But buying an EV is not as simple as walking into a dealership and driving one home off the lot.

In Maine, purchasing an electric vehicle can be an enormous challenge. Supply is limited, waitlists are long and some models aren’t even available here. While tax breaks can help offset the additional cost of EVs, those incentives are becoming complicated and more restrictive. Some manufacturers haven’t even submitted their 2023 lists of qualifying cars to the IRS yet, so dealers sometimes aren’t sure which vehicles qualify. And in the rural parts of Maine – most of the state – charging stations are scarce.

ELECTRIC SURGE

Electric vehicle sales in Maine have soared in recent years. In July 2019, the state had 2,926 registered battery and plug-in hybrid electric cars. By July 2022, that number had nearly tripled to 8,049. The growth in fully electric, battery-powered vehicles (rather than plug-in hybrids) has been especially sharp. In 2019, there were 899 battery-driven cars on the road in Maine. Three years later, that figure had increased to 3,448.

Sales would need to continue increasing dramatically to meet the ambitious goals of Gov. Janet Mills’ Climate Action Plan, which aims to have 41,000 light-duty electric vehicles on the road by 2025 and 219,000 by 2030.

The U.S. has had an electric vehicle tax credit program since 2009. For years, the $7,500 incentive applied to new vehicles with certain battery capacity requirements. Manufacturers that sold 200,000 or more vehicles were phased out of the program, meaning buyers seeking a car from mass-producing companies like Tesla, Toyota and General Motors Co. were out of luck.

Last August, President Biden signed the Inflation Reduction Act, renaming the incentive the “clean vehicle tax credit” and adding a host of complex new provisions.

It’s still possible to get a tax credit of $7,500. But qualifying is a lot more complicated, and guidance is lacking.

The legislation lifted the 200,000 cap, bringing larger companies back into the mix, and added a $4,000 tax credit for used vehicles.

That should have increased the number of options for electric car buyers. But additional qualifiers, like a price limit of $55,000 for cars and $80,000 for SUVs or trucks, and a stipulation that final assembly be in North America, created the opposite effect.

The legislative changes cut the number of qualified models from about 75 to barely 20. And because some companies have plants in multiple countries, qualifying can depend on the individual vehicle.

A BMW 3 Series plug-in hybrid will qualify if it’s made in Mexico, but not if it’s made in Germany. The U.S. Department of Transportation has created a vehicle identification number decoder for people to check specific vehicles.

MORE QUESTIONS AHEAD

New criteria going into effect will further shrink eligibility. Starting as soon as this month, the credit will be split in two, to separately cover critical battery minerals and battery components.

To qualify for one half, at least 40% of the critical minerals in a vehicle’s battery must either have been recycled in the U.S. or extracted or processed there or in any country that shares a free trade agreement with the U.S. For the other half, at least 50% of the battery components must be manufactured or assembled in the U.S. or a country with a free trade agreement. Those percentages will go up each year.

The Treasury Department has yet to release guidance on which vehicles meet the criteria but has said more information would be released in March.

The Inflation Reduction Act also put an income limit on the tax credit. Individuals making over $150,000 or couples making over $300,000 now are ineligible.

These changes have already yielded some results that could help EV buyers. Tesla cut prices of its Model 3 and Model Y to qualify. Ford quickly followed suit with the Mustang Mach-E. Companies are pledging to build U.S. manufacturing plants and to open battery recycling facilities.

Maine has its own rebate program, in effect since 2019.  Efficiency Maine instant rebates range from $500 to $7,500, depending on income, with price caps of $50,000 for a car and either $65,000 or $73,000 for a truck, SUV or van, depending on the mileage it can get on a charge. Mainers have redeemed 3,417 rebates since the program began – and 18 electric vehicles and 13 plug-in hybrids qualify.

AFFORDABILITY, AVAILABILITY

When Sara Salley and her husband, who live in Liberty, decided to replace their truck in 2021, they were lucky to find a Kia dealer with two all-electric Kia Niros on the lot.

The car was priced around $40,000. “We wouldn’t normally shop in that kind of price range,” she said.  

The couple qualified for a number of incentives that helped make their EV affordable: the federal tax credit, an Efficiency Maine rebate, a dealer rebate and a veteran’s discount from the dealership. With the money they got from trading in their other vehicle, the Niro cost the Salleys about $20,000 out of pocket.

But they learned after the fact that the nonrefundable federal tax credit could only be applied to their tax bill in the year they purchased the car. The Salleys’ tax bill was around $4,000, rather than $7,500 or more, so they couldn’t make full use of the credit.

People have the impression that green incentives help wealthy people more, Sara Salley said, and that “people who have less money can’t afford to take advantage of them.”

Not allowing the credit to produce a refund or carry over to the next tax year “feeds into that perception,” she said, and people should be able to get the full credit, whether they have a high tax bill or not.

She supports the idea behind the incentives but thinks they are too limited.

“Where the supply is so tight, a lot of people want electric vehicles, and if they can’t get them within a reasonable time because the incentives only apply to certain cars, that’s just going to slow down the uptake,” she said. “If we really want everybody who wants to make this choice to be able to, we have to have incentives that reach them.”

GROWING TREND

Electric cars are coming with or without federal help. Carmakers including Volvo, Audi, Mercedes-Benz and Jaguar – which may struggle to meet the new requirements for the federal tax credit – have pledged to go fully electric within the next decade.

But tax credits help drivers take the leap.

“In general, financial incentives are effective in getting people to choose electric vehicles,” said Amalia Siegel, program manager for Efficiency Maine.

On average, an electric vehicle is about $10,000 more expensive than a gas-powered car, though it offers major future savings on gas. The $7,500 credit plus, say, a $3,500 rebate from Efficiency Maine, could remove that price gap.

Cheryl Lewis is nearly “cultish” about her love for the Tesla Model Y she purchased in 2021, but she says she still had to “rub two pennies together” to afford the $51,500 car.

An electric vehicle charges at a station next to Portland City Hall. Lawmakers want to get more electric vehicles on the road, and new tax credits are designed to do that. Ben McCanna/Staff Photographer

“I sweated bullets to buy that car,” she said.

Lewis didn’t expect to qualify for the $7,500 tax credit, since Tesla had cruised through the 200,000 manufacturing cap years before, but she was disappointed that her car was too expensive to qualify for the Efficiency Maine rebate. She even wrote to state officials to see if there was a way she could get it.

“I felt like my state was not supporting this in the way they should,” she said.

Starting next year, buyers who qualify will be able to transfer their credits to the dealers, who can use them to lower vehicle purchase prices.

“That’s going to be the game changer,” said Dan Bennett, president of the Maine Independent Motor Vehicle Association, a trade group. “Nothing moves the market like cash on the hood.”

Siegel of Efficiency Maine said she expects the sale of electric vehicles to skyrocket – as long as there’s inventory.

DELAYS AND CONFUSION

Jack Chevrolet in Saco has had dozens of orders for electric vehicles. They’re just not readily available. Depending on the vehicle, customers may have to wait between three months to a year.

“As high as demand is, there isn’t a lot of supply right now,” said Mike Gibel, general manager.

Manufacturers are racing to fill more orders and get new models out for sale. The Cadillac Lyriq sold out four hours after it first hit the market last October. Ford repeatedly increased its annual production targets for the F-150 Lightning from 40,000 to 150,000.

“We need ramped-up manufacturing,” said Bennett of the Maine Independent Motor Vehicle Association.

Even at dealerships able to obtain vehicles, the new changes to the tax credit program have created confusion about which vehicles will qualify and for how much. Some dealers who don’t know the answers are encouraging customers to ask tax professionals.

“(The guidance) is changing so frequently, it’s really putting the onus on the dealership to answer questions about tax laws,” Gibel said. “We aren’t tax experts, we’re car salesmen. … We don’t want to give the customers the wrong information.”

Before closing last year, Paris Autobarn, on East Main Street in Paris, was one of the few businesses in Maine to specialize in selling and servicing electric vehicles. File photo

Bill Macdonald, who owns Macdonald Motors in Bridgton, said his team can provide an overview of the incentives, but they primarily defer to tax professionals.

Car buyers today are savvy, he said. They come to the dealership having done their research. Most electric vehicle shoppers already know what they want and what tax breaks or rebates they’ll qualify for.

“People aren’t going to just jump into an EV,” he said.

WHAT’S THE GOAL? 

The tax credit will help make electric vehicles more accessible to the masses, but it’s not going to help all dealers sell more of the cars.

Rob Goodwin, owner of Goodwin’s Volvo in Topsham, said the programs have generated a lot of interest, especially when all car prices went up during the pandemic.

However, just one trim level of the Volvo s60 Hybrid is eligible for the tax credit, and even that model has the potential to cross the $55,000 threshold.

“With Volvo being more of a global brand … this sort of erects barriers and makes it a little harder for us to sell cars,” Goodwin said. “It’s not punitive, but it feels like it’s a strike against you.”

Goodwin recognizes the value in some of the changes. Lower prices and incentives will put the cost of some EVs in line with gas-powered cars.

But he said some of the new credit requirements – final assembly in the U.S., battery and fine-mineral sourcing – seem to be more about the country’s manufacturing and automotive industry than the environment. And the income cap could discourage some potential buyers.

“I don’t know what the goal is. Are we trying to transition everyone to EVs?” Goodwin said. “If that’s the goal, they shouldn’t have barriers (around) trying to have this technology adopted.”

INFRASTRUCTURE COSTS

While there’s excitement around electric vehicles, Macdonald has also heard a lot of driver skepticism. How will the battery hold up in Maine winters? Will the vehicles be able to handle snowplows or sanders? If electricity prices continue to climb, will an EV still be worth it?

Many parts of Maine also lack the concentration of charging stations needed to achieve the state’s ambitious climate goals. Some are popping up in grocery store and town office parking lots, but chargers aren’t prolific, Macdonald said.

A row of Tesla charging stations at a supermarket parking lot in Windham last month. Ben McCanna/Staff Photographer

Martin Grohman of Biddeford recognizes that “range anxiety” may cause some people to hesitate, but he hasn’t had a problem.

Grohman is the executive director of E2Tech, the Environmental & Energy Technology Council of Maine, a group that’s working to advance Maine’s clean-tech economy. Perhaps not surprisingly, he bought an EV a few years ago – a used 2016 Tesla, not eligible for incentives. But he’s expecting that his new Tesla Model Y, recently delivered, will qualify.

He also had a charger installed at his house. He charges his car during “off-peak” hours, usually overnight and on the weekends, which he said makes a huge difference on his electric bill.

While his part of Maine is rife with public chargers, he knows there are “holes in the map” without any stations at all.

He’s pushing for a plan to have them installed at all of Maine’s public libraries, which he sees as a “super cool” way to address the problem. Grohman installed a public charger at his camp in Weld because he noticed there weren’t any others for 30 or 40 miles.

State and local officials are also trying to fill in the gaps.

Some municipalities, including Portland, South Portland and Scarborough, require developers to install electric vehicle charging infrastructure when building new parking areas. In August, Efficiency Maine announced an $8 million initiative that is expected to help fund 150 new public chargers by the end of May.

The number of public charging stations has gone up about 50% in the last two years – to 401, according to Efficiency Maine. But with just over 8,000 registered EVs in the state, that’s still 20 cars per charger.

Salley, with the Kia Niro, is optimistic that more stations will become available, but she doesn’t know when. She doesn’t drive a Tesla, which conveniently displays the nearest charging stations. Instead, she relies on three different apps, and they don’t always help.

“People who need a car for work can’t be worried about the range or the infrastructure,” she said.

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