Is the EESA Tax Credit the Answer to your Sales Slump?

Have you asked yourself any of these questions? “Why is my business so slow?” Or, “How long is the economy going to affect my business?” Or, “Is there anyone trying something different that is working? If you answered yes, you are not alone. The economy has had a significant impact on the Golf Car and Electric Vehicle business.

However, many businesses are now flourishing as a result of the Low Speed Vehicles (LSV) and Neighborhood Electric Vehicles (NEV) tax credits. This tax credit is one of the many components of the Emergency Economic Stabilization Act (EESA).

The EESA bill was passed in 2008 and includes many elements designed to stimulate economic growth as well as helping to improve the environment through “Green” initiatives. Part of the bill includes a tax credit to individuals and businesses that purchase a street legal electric vehicle. The IRS definition of “Street legal vehicles” includes all electric passenger cars & trucks as well as LSV/NEV. The approved bill calls for 250,000 vehicles followed by a four quarter phase out period.

How long will this last? Hard to say. Many feel that it will take up to 4 years for the 250,000 vehicle mark to be reached. However, the current approved vehicles will need to be re-certified in 2010. So, for now, individuals must purchase their LSV/NEV prior to the end of2009 to take advantage of the Tax Credit. While not guaranteed, most people involved in the industry expect the credit to resume again in 2010.

The amount of the tax credit is based on a complex calculation of Kilo Watt Hours (KWH) generated by the battery and motor configuration. The credit is $2,500 plus $417 for every KWH over 4 KWH’s. Generally speaking, the vehicles with more batteries and more powerful batteries produce a higher KWH calculation, and therefore, offer a higher tax credit.

Interestingly, many states have joined in by offering tax credits of their own. Oklahoma stands out by offering a tax credit worth 50% of the retail price of the car. Do your own math…when you combine the federal tax credit with the Oklahoma state credit, the car is “free” if not even better than free once you figure the federal and state tax burden after purchasing a certified LSV. You can check out Plug in America for the latest LSV tax credit information by state. There are at least 5 manufacturers that have already been certified by the IRS for the EESA Tax Credit. The amount of the Tax Credit ranges from $3,751 to over $5,000. Star Electric Vehicles offers 12 vehicles that qualify for the tax credit, 10 of which are $5,335.60.

To say that sales are brisk is an understatement. Star Electric Vehicle sales rates have increased fivefold since we were IRS certified in mid August. Other LSV manufacturers have also experienced large sales increases. Dealers who are aggressively advertising the Tax Credit are experiencing sales increases as high as 10 times normal sales rates. Advertising, bill boards and direct mailers will all help create awareness among many individuals and businesses that do not yet know about the tax credit. Things will more than likely heat up as we approach the end of the year as people begin to think more about their 2009 tax burden. It is highly likely that demand will be higher than supply. It is anticipated that many orders won’t be filled before the end of 2009.

So, if you are one of those dealers asking yourself, “when will the economy improve”, or, “what can I do to increase my sales”, LSV is your answer. It is time to re-think your approach and aggressively go after the rapidly growing LSV market. These are exciting times for anyone associated with selling electric LSV vehicles.

Let’s sell some cars!!