The electric car market just got supercharged, and Utah will feel the jolt

Tax breaks in Inflation Reduction Act and California’s end date for new gas vehicles will accelerate the conversion.

(Rick Egan | The Salt Lake Tribune) Cars charge at the electric vehicle charging station at Soldier Hollow Golf Course, in Midway, on Monday, June 20, 2022. New federal incentives and California's decision to ban gas-powered cars by 2035 will bring more electric cars -- and charging stations -- to Utah.

This story is part of The Salt Lake Tribune’s ongoing commitment to identify solutions to Utah’s biggest challenges through the work of the Innovation Lab.

[Subscribe to our newsletter here]

Two developments this month are poised to power Utahns into electric vehicles in the coming years.

Congressional passage of the Inflation Reduction Act makes millions of dollars in tax incentives available for Utah drivers and businesses to knock down the price of new and used electric cars, heavy trucks and charging stations.

And California’s announcement last week that it will ban new gas-powered vehicles after 2035 likely will speed the conversion in the rest of the country. This is because California is the largest car market in the nation and has consistently driven carmakers’ priorities. Other states, including Oregon and New York, are expected to announce similar mandates.

Rep. Steve Handy, R-Layton, who has been championing cleaner transportation on Capitol Hill for years as a member of the bipartisan Clean Air Caucus, said California’s deadline will have “amazing ramifications” in Utah because it is such a dominant market.

“When California sneezes, the rest of us catch a cold,” Handy said.

California led out years ago with a zero-emissions vehicle mandate that requires a growing percentage of the state’s cars be emissions-free. Thirteen other states have followed with their own mandates. The so-called “ZEV states” grant sellable credits to carmakers for the clean cars, and that has made the manufacturers favor those states when they distribute the limited number of electric vehicles. The Utah Legislature has resisted joining ZEV states.

“With regards to California’s ruling, the impact on Utah in the near term is a bit less clear, as we are not a priority state for auto manufacturers to target electric vehicles,” said Thomas Kessinger of Utah Clean Energy, a nonprofit advocacy group. “Utah policymakers could help change this by working to demonstrate that we want to accelerate availability of EVs in the state. Joining the other states that are Zero-Emissions Vehicle states would be the easiest step, but that’s not the only way to bring more EVs to meet customer demand here.”

Indeed, more than 130 models of electric cars are expected to hit the U.S. market by 2024, with virtually all brands offering models. And General Motors had already announced last year that it would stop producing gas-powered cars and light trucks by 2035, the same year California will stop accepting them.

(Christopher Cherrington | The Salt Lake Tribune)

With about half of the air pollution along the Wasatch Front coming from transportation, the move to electric cars and trucks has the potential to revolutionize air quality. It also lowers Utah’s carbon footprint as electricity moves to renewable sources.

A key element of the Inflation Reduction Act’s tax breaks for new electric cars is the requirement that they be assembled in North America and that the batteries include domestically sourced critical minerals like lithium. The intent is to build up American industries to reduce foreign dependence. Right now about 80 percent of lithium batteries are made in China.

But that requirement comes before there are sufficient domestic sources, so it will take a couple more years to see wide availability of affordable electric cars eligible for the $7,500 tax credit for new cars. Right now fewer than 20 new electric models qualify. Toyota just announced a $3.2 billion investment in a factory in North Carolina to produce batteries for Toyotas.

The more accessible tax credit for Utahns now may be the $4,000 break for buying a used electric vehicle up to $25,000. That has no requirements on domestic assembly or sourcing, but it can only be used once every three years by a car buyer.

Another incentive in the new federal law that will likely improve Utah’s air and carbon footprint is a tax credit of up to $40,000 for businesses to buy emissions-free trucks, including electric and hydrogen fuel cell powered trucks. The state of Utah has been offering its own incentive for such vehicles in its “Alternative Fuel Heavy-Duty Vehicle Tax Credit Program.” The state will cover up to $12,000 of the cost of the truck in 2023, and that can be combined with the $40,000 federal incentive. The amount of state incentive declines each year until 2031, but the federal incentive is in place until 2032.

The new law also extends or creates incentives for installing car chargers, with homeowners eligible for up to $1,000 for installing a home charger. The recent developments come on top of an earlier federal effort to build out charging stations across the nation. The National Electric Vehicle Infrastructure Program provides $50 million to build out Utah’s charging network.

While electric and plug-in hybrids are still a tiny percentage of Utah’s total vehicles, their growth rate is outpacing other fuel types. According to Utah State Tax Commission data, there were 21,131 electric vehicles and 8,311 plug-hybrids registered in the state on August 29, 2022. That compares to 16,407 electric and 7,073 hybrids registered as of Feb. 15, 2022.

Tim Fitzpatrick is The Salt Lake Tribune’s renewable energy reporter, a position funded by a grant from Rocky Mountain Power. The Tribune retains all control over editorial decisions independent of Rocky Mountain Power.