Car buyers, fire up your internet and get your websites pre-loaded.
The Colorado electric vehicle cash-for-clunkers program starts Thursday at 9 a.m., with $6,000 in extra rebates available to the first few hundred people who sign up and are willing to turn in an older fossil-fuel powered car. Those participating in Vehicle Exchange Colorado must apply the $6,000 toward a qualifying new or leased electric vehicle or plug-in hybrid electric vehicle, or take $4,000 off a used EV.
Electrification rebates tend to go fast. (See: “e-bike rebates/crashed servers” in your search bar.) Colorado has $1.8 million for the first year of the clunkers exchange rebates, and hopes to expand the budget for the next fiscal year starting in July 2024. Colorado Energy Office program manager Ed Piersa said the state expects the exchange program to last for years and ramp up financing if it proves popular.
Let’s jump right to the biggest questions about the clunkers exchange:
Why is Colorado doing this, and whose money is being used?
The Colorado program has a few goals: Promote equity in the electrification revolution in the state by using an income-qualified exchange program to make EVs cheaper to more people, while also taking older, higher-emissions fossil fuel cars off the road. Colorado has pledged to get 940,000 EVs on state roads by 2030, and has also launched various rules and programs to promote environmental justice and economic equity along the way.
The money comes from new fees implemented when the state transportation department’s funding and spending were overhauled in the legislature in 2021.
What qualifies me for $6,000 in extra EV rebates?
There’s a multi-part test for this answer. First, you have to be income-qualified, meaning you make less than 80% of the median income in your county, or have already qualified for a government assistance program like Medicaid or SNAP food benefits.
Second, you have to purchase a new or used EV that costs less than $50,000 from a dealer qualified to be in the state rebate program. The vehicle must be zero- or ultra-low emissions, meaning a fully electric battery-only EV, or a plug-in hybrid electric vehicle. Used EVs get a $4,000 rebate. New car seekers can also get the rebate applied to a lease instead of an outright purchase.
Third, the fossil-fuel powered car you turn in must be fully owned, and either 12 years old (2011 model year for this year’s rebate) or have failed a recent emissions test. It must be running — no “push, pull or tow” for this new program.
How is the $6,000 taken off the price?
By going through a new or used car dealer qualified through the Vehicle Exchange Colorado (VXC, because why not make it more confusing), the $6,000 or $4,000 can be taken off the sale price “at the register,” and the dealer takes care of the paperwork.
Can I “stack” it with other new EV rebates and tax credits?
Absolutely. We’re pretty sure. Definitely.
We would apologize for that vagueness, but only if the government apologizes first. Some other credits are certainly stackable: The existing Colorado state tax credit of $5,000 for 2023 EVs can also be taken off at point of purchase if you are financing the vehicle, the most convenient way.
Now, you’ve probably heard about another $7,500 in federal tax credit available to many EV buyers, expanded this year to include many more models of cars if they meet certain U.S. manufacturing requirements. However, to qualify for the full $7,500, you must have enough income and federal tax obligation to offset that amount; if you make less and therefore owe less than $7,500 in federal taxes at the end of the year, the credit you can take is lowered accordingly.
Utilities are also offering lucrative EV rebates, in part because they want more cars juicing up on cleanly generated electricity. Xcel has new EV rebates up to $5,500 for income-qualified customers. However, when we asked state officials in the spring of 2023 if utility rebates stack up with all the others, they said buyers would have to choose: If you get a utility rebate, you can’t also take the the $5,000 state tax credit. State officials recommend checking with the utility first to figure out what can be stacked.
Where and how do I sign up for the new state program?
Go to the state’s vehicle exchange web page here, before 9 a.m. Thursday so you can read up on the program and gather anything you might need to prove you qualify or answer questions. For now, the exchange program is open-ended, meaning it’s run on a first-come, first-served basis until the initial $1.8 million runs out.
Will everyone qualify, or am I entering a lottery for limited funds?
The state has about $1.8 million for the old car trade-in portion of the programs through mid-2024. We are bad at math, but that would only be 300 to 400 of the $6,000 rebates.
We asked state officials what they will do when they hit that $1.8 million limit. They do plan to seek more money for the next year of the program, starting in July 2024, and high interest in the clunker rebates will make their budget ask that much easier.
Has this been done before?
How quickly we forget!
After the U.S. housing and financial markets crashed in 2007 and 2008, the Obama administration came into office searching for economic stimulus ideas. Economists argued, before mass-market electric vehicles were really available, that multiple administration goals could be accomplished by paying owners of inefficient gasoline cars to turn them in and buy a cleaner, new gasoline car. The Car Allowance Rebate System — acronym dad jokes — would reduce air pollution and bolster U.S. manufacturing employment.
Under the CARS program, owners got $3,500 to $4,500 if they turned in a car with less than 18 miles per gallon fuel efficiency. Consumers went wild, trading in 677,000 cars in less than two months of 2009, and forcing the government to add $2 billion to its original plan of $1 billion in rebate spending.