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Renewed U.S. Tax Credit Gives E-Motorcycle Market a Boost

Ryan Citron — December 29, 2015

An important federal tax credit for electric motorcycles (e-motorcycles) expired at the end of 2013, but has just been reinstated as part of the enormous $1.1 trillion spending package approved by Congress in December 2015. The federal tax credit will offset 10% of the purchase price for qualifying plug-in two- and three-wheel vehicles (must have a top speed of at least 45 mph and a 4 kWh battery or larger). The maximum credit available to consumers will be $2,500 and the credit will apply retroactively to all e-motorcycle purchases since January 1, 2015.

This effort, reportedly spearheaded by California-based manufacturer Zero Motorcycles and non-profit Plug In America, will likely serve as a sales boost for the e-motorcycle industry in the United States. However, e-scooters and e-bikes do not receive the same tax advantages since these technologies generally have a top speed limit of 30 mph and 20 mph, respectively. So why are lower speed electric vehicles (EVs) left out of the incentive regime?

Highway-Capable and Gas-Powered Vehicle Replacement

Part of the reason is likely due to the fact that only on-road or highway-capable vehicles are considered to be worthy of tax credits, based on the larger volume of emissions being avoided from these vehicles. Another explanation specific to e-bikes may be that the technology is seen as replacing bicycles (already a clean technology), not cars. However, this assumption may not be entirely accurate.

A consumer survey conducted by the Oregon Transportation Research and Education Consortium (OTREC) demonstrates that the primary reason respondents bought e-bikes was to replace some car trips (see Figure 1 below). Additionally, the main reason cited by respondents for using an e-bike was to commute to work or school (see Figure 2). The survey from OTREC suggests that e-bikes are used for commuting and to replace car trips much more than lawmakers think or even recognize. Speaking from personal experience, my e-bike replaced both my traditional bicycle and my gasoline-powered car—with the primary purpose of using the e-bike as a commuting vehicle.

While the tax credits are welcome news for the e-motorcycle industry, e-scooters and e-bikes continue to be under-incentivized and under-utilized technologies in the United States. If the primary goal of tax credits for all EVs is to replace or reduce the number of gas-powered vehicle trips, then e-scooters and e-bikes should be considered in the future.

Figure 1: OTREC Survey Respondents’ Primary Reason for Purchasing an E-Bike

Ryan Blog Fig 1

(Source: Oregon Transportation Research and Education Consortium)

Figure 2: OTREC Survey Respondents’ Main Purpose for E-Bike Trips

Ryan Blog Fig 2

(Source: Oregon Transportation Research and Education Consortium)

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