Newly released electric vehicle sales data has Colorado policymakers patting themselves on the back for a job well done. The reality of the state’s vehicle market is slightly more complicated.
According to a recent report from the Northeast States for Coordinated Air Use Management, electric vehicles made up 25.3 percent of all new cars sold in Colorado in the third quarter of 2024. California, long the national leader in new EV sales, fell to second last quarter, with electric vehicles accounting for 24.3 percent of new car sales.
“Coloradans are purchasing electric vehicles at a higher rate than any other state because they are affordable, quiet, and a great ride,” Governor Polis said of the findings in a celebratory press release. “EVs are helping us reach our bold climate goals and protect our clean air.”
“Between investments in charging infrastructure and generous incentives to bring down purchase and lease costs, our commitment to making electric vehicles an affordable and reliable option for Coloradans is paying off,” added Will Toor, Executive Director of the Colorado Energy Office.
However, while the report’s findings might be good for political public relations, it is important to point out that a single quarter of strong sales doesn’t tell us very much about the state of Colorado’s electric vehicle market.
In reality, Colorado briefly besting California hardly moves the needle on the state’s climate goals and belies the fundamentally unjust nature of the policy support that helped make it happen.
Context is Important
According to the state’s electric vehicle dashboard, EVs (including hybrids) still represent just 3.25 percent of all light-duty vehicles on Colorado roads—a far cry from the “100 percent by 2050” goal the Polis administration currently envisions.
In the nearer term, the Governor’s Greenhouse Gas Roadmap calls for 940,000 electric vehicles on the road by 2030. Currently, there are just over 156,000.
Even purely in terms of their share of new sales, which prompted the Governor’s cheering in the first place, last quarter’s high watermark of 25 percent still lags well behind Polis’ regulatory goals.
Last October, his administration finalized air quality rules to eventually require vehicle manufacturers to ensure (somehow) that 82 percent of new light-duty vehicles sold in Colorado are electric.
Despite the Governor’s confident proclamations to the contrary, it’s not yet clear that EVs have won over enough Coloradans’ hearts and minds to come anywhere close to meeting his climate goals.
Subsidy Sugar High
Rather than prove that Coloradans suddenly have a newfound preference for zero-emissions vehicles, what the report does suggest is a specific subset of the state’s population quickly moved to take advantage of the rash of new, lavish subsidies for the purchase of an electric vehicle made available by both the federal and state governments, as well as utilities like Xcel.
Due to the terms of their overlapping rollouts and phase-downs, mid-2024 was the prime time to purchase an electric vehicle in Colorado with the goal of capturing the broadest possible array of tax incentives—worth upwards of $26,500.
The state government alone unveiled the country’s most generous electric vehicle tax credit in mid-2023, then created an option to boost it another 50 percent in 2024. That initial state credit is notably set to decrease by about 30 percent in 2025.
And while climate advocates like the Governor might embrace the temporary sales boost as evidence that the subsidies are having their intended effect, most residents should find those tax credits and rebates objectionable regardless of their perceived efficacy.
Beyond philosophical qualms with the government using public dollars to give preferential support to certain private businesses, as well as their distorting effect on Colorado’s Taxpayer’s Bill of Rights, climate tech subsidies are notorious for funneling money out of the broader tax base and into the pockets of wealthier residents.
At the federal level, EV subsidies are highly regressive in their distributional outcome and have been for decades. A study from UC Berkeley researchers earlier this year found that since 2006, U.S. households have received over $47 billion in tax credits for “clean energy technologies“ like heat pumps, solar panels, and electric vehicles. Of that money, just 10% went to the bottom three quintiles of households based on income. Meanwhile, the top 20% of highest-earning households received roughly 60% of all subsidies.
The distributional effects are even worse for EV tax credits specifically, where the top 20 percent of earners captured 80 percent of available subsidies.
Though similar state-specific tax data for Colorado has not been made available, there’s some reason to think that the state at least matches federal trends.
Colorado is already a wealthier state than the national average, so if more Coloradans are purchasing electric vehicles than elsewhere, it stands to reason that those vehicles are going to more affluent households on average. The bulk of available state and federal tax-credits are also not currently limited to low-income car buyers (though some are).
Furthermore, the state’s own EV dashboard highlights the economic disparity among current EV owners. Despite representing nearly 40% of the state’s population, so-called Disproportionately Impacted Communities (DICs)—defined by state statute as “a census block group where the proportion of households that are low income, that identify as minority, or that are housing cost-burdened is greater than 40%”—currently only host 27% of registered EVs on the road.
According to Gallup, upper-income households (earning $100,000+) are nearly three times more likely to report currently owning an electric vehicle than middle-income households ($40-$99k), and are seven times more likely to own one than lower-income households (<$40,000).
Furthermore, the continued price differentials between EVs and internal combustion engine vehicles suggest the likelihood of socioeconomic disparities among Colorado EV drivers. According to the state’s dashboard, the average MSRP for both new and currently owned EVs is still more than $20,000 higher than for gas vehicles.
Finally, national surveys also indicate that most current EV owners are use them to supplement, rather than fully replace, gas-powered vehicles.
An Experian consumer research report from earlier this year found that 89 percent of households with an electric vehicle had at least two vehicles. Eighty-one percent of those EV households reported having a gas-powered car as a second vehicle, while another 14 percent reported having a backup hybrid.
So, in the end, what the Governor’s announcement boils down to is a celebration of the fact that some wealthy Coloradans are buying secondary vehicles to back up their gas guzzlers, with the help of taxpayer-funded government largesse, at a slightly higher rate than the rest of the country.
That’s a reality that’s hardly worth popping the champagne over.
