It’s been a year since Colorado launched a program to offer lower-income drivers generous discounts on electric vehicles in exchange for ditching their old gas- or diesel-powered cars.
So far, it’s working better than expected.
On Tuesday, the Colorado Energy Office announced that it had issued 1,301 rebates through the Colorado Vehicle Exchange program, which offers point-of-sales discounts worth $6,000 off of a new plug-in EV or $4,000 off of a used plug-in EV. The total is more than six times higher than the number of rebates the state expected to give out in the program’s first year.
“What we’ve seen is a lot of people love electric vehicles both because they’re cleaner and fun to drive,” said Will Toor, the director of the Colorado Energy Office. “If you make it financially feasible for low- and moderate-income drivers to buy an EV, they’ll jump on it.”
Colorado also announced it will invest an additional $9 million to continue the cash-for-gas-guzzlers program. The infusion is funded by a fee on deliveries like packages and food, which was signed into law by Gov. Jared Polis in 2021. Conservative groups have criticized Democratic policymakers for imposing the surcharge without voter approval.
The state originally invested $5.7 million to fund the Colorado Vehicle Exchange program during its first year of operation. Ed Piersa, a senior program manager for the Colorado Energy Office, said the program had used up its funding in July 2024, and the additional investment is expected to keep the benefit open to applicants until July 2025.
The fees behind the program, however, have already been approved to continue through 2032, so Piersa expects the discounts should be available well beyond next summer.
To qualify for the program, Colorado residents must earn less than 80 percent of the area median income for their county, and trade in a gas- or diesel-powered vehicle that’s either at least 12 years old or fails a state air quality emissions test.
The Colorado Energy Office reports drivers have redeemed about two-thirds of the rebates rewarded through the program by the end of June 2024. That means 879 old or high-emitting cars have been replaced by plug-in vehicles.
The additional investment in the program comes as Colorado has established itself as a bright spot for EV adoption in the U.S.
The share of newly registered full battery-electric vehicles and plug-in hybrids rose to 22 percent in the second quarter of 2024, according to a report from the Colorado Automobile Dealers Association. The figure puts the state on track to compete with Washington and Oregon for the second-highest EV market share in the country after California by the end of the year.
Behind the trend is a generous package of incentives designed to entice drivers to lease or purchase a plug-in vehicle. In addition to the Vehicle Exchange program, Colorado offers residents a $5,000 tax credit for the purchase of a new EV, plus an additional $2,500 if the car carries a recommended sales price of less than $35,000. Xcel Energy, Colorado’s largest gas and power provider, also offers EV discounts for income-qualified customers.
It’s also possible to combine those discounts with a federal EV tax credit worth up to $7,500. Only a handful of vehicles, however, qualify for the full amount due to restrictions meant to support car and battery manufacturing in the U.S. and U.S.-allied countries.
