Editor's note: A previous version of this report incorrectly implied the exemption is offered by Washington, D.C. It is from Washington state.
The sales tax exemption for electric vehicles and other clean-energy vehicles in Washington state will expire at the end of May, earlier than expected, adding to headwinds faced by automakers in getting EV sales off the ground.
The tax exemption, designed to reduce carbon emissions and air pollution, went into effect in mid-2016, and expires once 7,500 eligible vehicles from new sales have been titled. There were 6,448 qualifying vehicles in Washington at the end of 2017, and the threshold was passed on April 4, according to Department of Licensing spokesman Mark Horner. The Department of Revenue subsequently confirmed that the tax exemption will terminate on May 31.
The tax break is capped at $32,000 per car or light-duty truck that uses cleaner sources of energy such as electricity, natural gas or propane. Washington follows California's low emission vehicle program, but not its mandate for a certain percentage of vehicles sold to be zero emission.
A House bill to extend the sales tax exemption through June 2021, and remove the sales cap, failed during the legislative session. Proponents argued that subsidizing electric vehicles through the tax code is necessary to maintain consumer interest in the emerging electric drive market until vehicles are developed with greater range and lower cost.
The state has a goal of putting 50,000 clean fuel vehicles on the road by 2020. There are 21,507 vehicles registered so far.
In 2015, Georgia eliminated a $5,000 tax credit and EV sales nose-dived nearly 90 percent.
General Motors and the Washington Association of Global Automakers were among those that testified in favor of expanding the Washington exemption.
Nationwide, only about 1 percent of total sales are plug-in hybrid or battery electric vehicles, according to market researcher Baum & Associates
Major automakers have partnered with Northeast states to promote the growing number of electric vehicle models available today, as well as their fuel saving, lifestyle and tax benefits. The auto industry is also pressing states with mandates to increase sales of zero emission vehicles to do their part by investing in more electric charging infrastructure, offering incentives and purchasing EVs for state fleets. Conversely, environmental groups and officials at the state level, say automakers need to be more aggressive in marketing their EVs, including advertising, pricing and national distribution.