$ 900 e-bike tax credit is part of the infrastructure bill

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Over the past decade, the United States has spent roughly $ 10 billion to subsidize the purchase of electric vehicles through tax credits. Not a dime of that, however, has gone to the world’s best-selling and fastest growing form of electric vehicle – a more efficient, dynamic vehicle than any Tesla or Nissan Leaf. It is of course the electric bicycle.

But under the “Build Back Better” spending bill, which passed the House last month and awaits Senate action, e-bikes could, for the first time, receive a boost from the federal government. Among its more than 2,000 pages is a tax credit of up to $ 900 for electric bicycles.

If the incentive survives intact, the e-bike makers, who have been pushing for its inclusion, will perform a victory lap (battery assisted). “The situation will be turned around if this comes to pass,” said Mike Radenbaugh, CEO of startup Rad Power Bikes. “We think e-bikes should ultimately benefit from more racks … but we’re really happy to at least see ourselves heading in the right direction.”

This is a milestone for an industry that barely existed a decade ago. “The fact that there is an e-bike incentive in a federal climate change bill is remarkable given that a few years ago a lot of people didn’t know what e-bikes were,” said Christopher Cherry, a professor in the Department of Civil and Environmental Engineering at the University of Tennessee at Knoxville.

As it stands, the bill provides for a 30% credit up to $ 3,000 spent on a new electric bicycle, excluding bicycles that cost more than $ 4,000. (The credits also gradually disappear based on household income starting at $ 75,000 for a single taxpayer.) This is a regression from the original proposal. In the bill that was introduced in the House, the credit covered 30% of expenses of up to $ 5,000 for bicycles costing up to $ 8,000.

“It was a big blow to us,” said Steve Boyd, general manager of North America for Tern Bicycles, whose most expensive electric cargo bike costs more than $ 9,000. Under the original price cap, all but one of Tern’s models would have qualified; now all but a few are excluded. That low threshold, Boyd said, could lead some customers away from the best bike for their needs. None of Tern’s folding electric bikes, for example, cost less than $ 4,000.

Credit cuts were a natural part of the process of passing the bill in the House, said Noa Banayan, director of federal affairs at PeopleForBikes, a trade association that lobbies on behalf of bicycle manufacturers. “Of course we want as many credits as possible to be available to as many people as possible,” Banayan said, “but we’re thrilled with anything that puts e-bikes on the federal map because we see it. as a first step. “

For Rad Power, which sells its e-bikes online at prices ranging from $ 1,000 to $ 2,000, the bottom cap fits the bill. “Most e-bike companies probably won’t see a huge benefit, but I think Rad is an outlier that way,” Radenbaugh said.

Data from the NPD Group, which tracks sales at bicycle stores and outdoor stores, shows that e-bike purchases tend to cluster at the top and bottom of the scale. Almost 60% of the bikes sold in the 12-month period that ended in September cost less than $ 500 or more than $ 3,500. The fastest growth, however, occurs in the middle: Unit sales of bicycles priced between $ 1,500 and $ 2,000 increased at a rate of 176% over the previous 12 months during the same period. .

There is little academic research, Cherry said, on how price affects consumer preferences in the e-bike market. He and his collaborator, John MacArthur of Portland State University, are currently working on a study that addresses these questions.

In the absence of data, Congress must guess at the level of incentive that will convince the greatest number of people to buy e-bikes while spending as little as possible. “We don’t know what this great place is,” MacArthur said.

For now, Congress seems to be taking the approach that it’s better to prevent an affluent weekend warrior from using the credit to buy a ride than to help a potential cargo bike customer get over the shock of the sticker. For some brands of e-bikes, this may mean a price adjustment depending on the tax code. “If the limits stay the same,” Boyd said at Tern, “and we have a bike that will run normally at $ 4,200, then maybe we’ll end up at $ 3,999.”


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