Electric vehicle incentives are dwindling in New Jersey

⚫ Momentum of EV sales may shift because of recent changes

⚫ A sales tax exemption on EV sales has gone away

⚫ Some financial incentives remain

Sales of electric vehicles have skyrocketed over the past few years in the Garden State.

The question is, will that momentum slow down in the face of recent changes that would have consumers paying more at the dealership?

Right now is still considered by industry observers as an ideal time to purchase an electric vehicle in New Jersey, thanks to a few incentives that have stuck around. The financial pull, however, isn't as great as it used to be.

"We want EVs not just to trickle out on roads, we really want a massive increase," said Doug O'Malley, director of Environment New Jersey.

Electric vehicles are making up a bigger share of new vehicle sales in New Jersey — 12.2% in 2023, compared to 8% in 2022.

According to the state Department of Environmental Protection, there were over 183,000 battery and hybrid vehicles registered on New Jersey's roads as of June 30, 2024. That count was 154,153 at the end of 2023.

EV incentives going away

As of Oct. 1, a sales tax exemption on zero emission vehicles in New Jersey is over.

Through June 2025, EV buyers are paying a sales tax rate of 3.3125%, according to the New Jersey Department of the Treasury.

The rate will then jump to a full 6.625% on July 1, 2025. On that date, a $40,000 purchase, for example, would actually cost a buyer $42,650.

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Starting July 1 of this year, electric vehicle owners began paying a significantly higher registration fee on a yearly basis as part of the state's plan to make sure that EV drivers are paying their fair share into the Transportation Trust Fund. The additional expense is $250 in 2024, and it increases by $10 each year through 2028.

For new buyers, all of those yearly fees are added to the upfront cost of a vehicle.

"What it is, quite frankly, is sticker shock for electric vehicle buyers," Jim Appleton, president of the New Jersey Coalition of Automotive Retailers, told New Jersey 101.5 in September.

Appleton added, the "Charge Up" incentive from New Jersey has dwindled over time. Originally, Garden State officials were offering buyers a rebate of up to $5,000. In the latest round, the base incentive is $2,000, and another $2,000 is available for buyers under certain income thresholds.

Still a good time to buy an EV?

Financial incentives haven't been the only factor leading to tremendous growth in electric vehicle sales in New Jersey. The gap in price between a gas-powered vehicle and an EV has narrowed greatly, there are more EV options these days (for those who'd prefer a minivan or truck, for example), and charging infrastructure has expanded, giving owners more opportunities to power up on the road.

"This is the exact right moment that we need to be putting the foot on the electric accelerator," O'Malley said. "We want to make it easy as possible for people to get behind the wheel of an EV and actually drive off the lot."

There are still incentives that can attract wannabe EV owners in 2024. Among them is a potential federal tax credit of as much as $7,500. Factors that determine the ultimate credit include one's income and the battery capacity of the vehicle.

The clean-vehicle credit is also good for leases, and buyers of used EVs can get a credit of up to $4,000.

Drivers can also benefit from the state's Charge Up incentive mentioned above.

O'Malley noted that at the dealer, customers may not get a complete breakdown of each incentive that's coming off the price of the vehicle. They may just be presented with the final price after all of the perks have been applied.

"It's still a really good time to buy an electric vehicle," O'Malley said.

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