Colorado’s revolutionary switch-over to clean electric vehicles may have to hit the brakes just as it was meant to be hitting the straightaway for maximum acceleration.
The Trump administration does not like recent policies pushing clean energy over traditional fossil fuels, and will be eliminating the most lucrative EV-buying subsidy of a $7,500 federal tax credit. State officials say that will now disappear Oct. 1.
The smaller but still helpful state tax credit is also scheduled to drop lower Jan. 1 as part of the preplanned transition to sustainable sales of EVs. And then over the summer, word came that because the state wasn’t meeting statutory budget targets for next year, all clean energy subsidies will be cut in half.
The Colorado Energy Office, a key agency in the state trying to reach the goal of 930,000 EVs on the road by 2030, is shouting out “buy now” advice to anyone who will listen. Here are some key facts and tips about the current EV market:
The federal bottom drops out come October
For the next two and a half months, the combined federal/state tax credits cut a moderately priced EV transaction by a stimulating $11,000, taken off right at the cash register. (The dealer does the paperwork and receives the credit later.) But Sept. 30 is now the last day to get the federal $7,500 portion of that big discount.
“Right now is the time to buy an EV for anybody in Colorado who has been thinking about it but was holding off or waiting,” Colorado Energy Office chief Will Toor said. “It’s your best financial opportunity for a while.”
Colorado adds a $3,500 discount through a tax credit (down from $5,000 last year), and then $2,500 more if the EV you are buying has an MSRP under $35,000.
“That’s $13,500 off if you’re buying a certain kind of vehicle,” Toor said. “We’re obviously very disappointed in that decision by Congress and President Trump to remove the tax credits, but given that they are, now’s the time to buy.”
From Oct. 1 through New Year’s Eve, what’s the story?
The current Colorado tax credit of $3,500 sticks around from Oct. 1 through Dec. 31, as well as the extra $2,500 in state credit for cheaper EVs.
New Year’s Day will mark a big turning point. The Colorado tax credit was scheduled to drop to $1,500. Toor explained that Colorado’s credit started high, at a time when it was unclear if federal tax credits would apply to enough available EVs because of federal regulations on how much of the vehicle needed to be built inside the U.S. to qualify.
“The idea was that we would have a larger state credit, while it was harder to get the federal credit, and then it would gradually see that phase down as the federal credit became more universal,” Toor said. “Unfortunately, as we’re seeing, the Trump administration is taking away the federal credit, but our credit still does phase down over time.”
Then price tags got even scarier. The Colorado budget has triggers built in, if projected revenue growth falls below a certain level, all clean energy credits like EV subsidies, electric bikes, electric heat pumps and more must be cut in half. So the Colorado EV credit of $1,500 will actually be only $750 for calendar year 2026.
The $2,500 extra for a new EV below $35,000 will stay in place, Toor said. There will also be millions of dollars of state money available again for the “cash for clunkers” program, where new EV buyers can get an extra $6,000 credit if they trade in a car that has failed emissions tests or is a certain number of years old.
That program, called Vehicle Exchange Colorado, is meant to stimulate replacement of older, higher-emissions gasoline cars in favor of cleaner EVs.
Will EV sales in Colorado plummet after the fall?
There’s bound to be a reaction, Toor said. When the retail price of many EVs remains thousands of dollars higher than the equivalent size gasoline car, ending an $11,000 discount will be noticed.
“We’re certainly concerned about the impacts, particularly when you add in the unknown impact of tariffs on the cost of vehicles — the potential for significant inflation and vehicle costs due to the Trump tariffs.” he said. “I think it just creates a lot of uncertainty going forward, from a state perspective.”
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Nationally, a Reuters story said “Electric vehicle registrations could fall 27% without the tax credit, according to a joint study in November from professors at the University of California, Berkeley; Duke University and Stanford University.” Colorado numbers could hold up slightly better given the remaining state tax credits, and a strong dealer commitment to the EV changeover.
So is Colorado surrendering in the EV revolution?
Absolutely not, according to Toor and nonprofit clean energy leaders. Colorado will be redoubling efforts to control what it can by ensuring buildout of a reliable, ubiquitous fast-charging network for state EV drivers, Toor said.
States including Colorado won a lawsuit against the federal government to release billions of dollars in previously committed funds for the national fast-charging network, Toor said. So Colorado’s share of $44 million can now be spent, and much of it was already committed to projects that can now quickly seek contracts for construction, he said.