Colorado's $5,000 EV Flat Tax Credit Makes Tesla's $35,000 Model 3 A Lot More Attractive

model 3 sketch
It looks as though the state of Colorado is welcoming electric vehicles (EVs) with open arms. The state just took the wraps off what it is likely the country’s best state-based incentive with respect to EVs: a tax credit that is worth a whopping $5,000 [PDF].

Unlike previous EV tax credits from the state, which relied on often complicated calculations based on battery size, this is a flat tax applicable to all light-duty EVs. Georgia’s EV credit also used to top out at $5,000, but it was discontinued as of July 1st 2015. What makes Colorado’s incentive even more attractive is that the $5,000 can be assigned to a dealership or finance company at the point of sale. That means that you’d effectively knock $5,000 off the price of a brand new EV at the time of purchase instead of waiting for tax filing time to claim the funds.

This makes “mainstream” EVs like the Tesla Motors Model 3 and the Chevrolet Bolt even more attractive to potential buyers. The Model 3 was first unveiled to the public in late March, but even before the veil was lifted on the entry-level EV, over 100,000 people had already plunked down $1,000 deposits for preorders. As of today, over 400,000 people have preordered the vehicle.

tesla model 3 two

Tesla says that the Model 3 can seat five people, will dash to 60 mph in under six seconds and will travel at least 215 miles per charge. Base vehicles have a rear-mounted electric motor, although there will be dual-motor variants and more powerful engine options (including Ludicrous Mode).

The Model 3 starts at $35,000 and qualifies for a $7,500 federal tax credit. Combine the federal incentive with the Colorado state incentive, and you’re looking at a total outlay of $22,500. So Colorado residents can either lower the purchase price of a base Model 3 or offset the cost of loading up on options (Tesla CEO Elon Musk expects the average transaction price for the Model 3 to be $42,000 before incentives). Model 3 production is expected to start gearing up in late 2017 barring any major hiccups.

bolt 3

If you prefer your EVs to look a bit homelier, the Chevrolet Bolt would also quality for Colorado’s new tax credit, which would take its $37,500 base price down to $25,000 after state and federal tax credits.