Minnesota's new EV rebate program is still a work in progress

Minnesotans hoping to capitalize on a new state rebate of up to $2,500 to buy or lease an electric vehicle may be surprised when they try to cash in: The website tells them to try again later.

The state rebate program approved by the Legislature this spring for new and used EVs is still very much a work in progress. According to the Minnesota Department of Commerce, there's no launch date set for the program, and consumers interested in the perk are encouraged to check the department's website frequently for updates.

The rebate program is "under development," said Peter Brickwedde, a Commerce Department spokesman. He said officials are "working to ensure we meet regulatory requirements for applicants and are accurate in providing rebates."

Progress is being made, Brickwedde said, including the addition of a new business analyst "to refine the technical aspects of a rebate processing system."

The rebate permits buyers and lessors of new EVs costing up to $55,000 bought on May 25 or after, may qualify for a $2,500 rebate from the state. Those buying used EVs for up to $25,000 may receive up to $600.Taxes and fees are not included in the math.

When the program does launch, applications for rebates will be reviewed on a first-come, first-served basis, according to the Commerce Department.

Rebates and tax incentives for EVs offered by state and federal governments are designed to encourage consumers to embrace a new, environmentally friendly manner of transportation. In Minnesota, transportation remains the largest source of atmosphere-warming greenhouse gases.

Applying for incentives, with their varying restrictions and regulations, can be a little complicated, said Jukka Kukkonen, chief EV educator and strategist for Shift2Electric, a Twin Cities-based EV consulting and training firm.

"Sometimes if too much information is thrown at people, they just throw up their hands," he said. "But at the same time, incentives are an excellent way to help to justify a purchase and [help] make a decision."

Minnesota set aside about $10.6 million for the EV rebate program in fiscal 2024, which began July 1, and $5.1 million in fiscal 2025, which ends June 30 of that year. Funds for the program expire on June 30, 2027.

"Rebates help, but people aren't buying an EV for the rebate," said Pavel Ihnatovich, owner of GS Motors in Hopkins, which sells used EVs. "Customers who come here have made up their mind they want an electric car. EVs are already good enough to sell themselves."

Indeed, a query on the Minnesota EV Owners Facebook page revealed many buyers who bought electric vehicles regardless of the state rebate. No one said they were discouraged by the program's delays.

But Scott Lambert, president of the Minnesota Auto Dealers Association, said dealers across the state are "are disappointed it is taking this long to get the rebate program started."

Lambert said auto dealers embrace rebates and similar incentives as opposed to mandates such as those contained in the Walz administration's new clean car emissions rules. The association legally challenged the new rules, which require automakers to bolster their stock of electric and hybrid vehicles across the state, but the U.S. Supreme Court this month declined to take the case.

Since the state declared its rebate program retroactive to May 25, dealers are concerned they "won't have the opportunity to see if in fact an active rebate program can move the market," Lambert said. "The money could be all gone by the time they launch the program."

EVs constituted fewer than 1% of the 8.1 million vehicles registered in Minnesota in 2022, according to the Department of Public Safety. But demand is growing; as of July 1, some 41,414 EVs were registered across the state, compared with 32,592 for all of 2022.

The Tesla Model Y, with an entry price of about $44,000for this year's model, is by far the most popular EV registered in Minnesota. Plug-in electric hybrid (PHEV) vehicles also qualify for the state rebate.

For now, Minnesota EV buyers can take advantage of federal incentives. Obtaining federal rebates of up to $7,500 for new EVs and $4,000 for used vehicles can be more complicated, but when paired with state incentives they can offer meaningful savings to buyers.

According to Kelley Blue Book, the average price of a new gas-powered vehicle this year is $48,334 vs. $53,469 for an EV. Someone in the market for a new car could find a new EV, on average, cheaper using federal and state rebates than a gas-powered vehicle, assuming all restrictions are met.

The federal program, part of the Inflation Reduction Act signed into law last year, initially worked as a credit claimed on one's income tax returns. On Jan. 1, consumers will have the option to take the credit upfront at the dealership, lowering the vehicle's purchase price — a method much preferred by consumers, according to the U.S. Treasury Department. Federal incentives still have income and model restrictions.

Incentives or not, Kukkonen said it's still a good time to buy an EV, including for those consumers shopping for a more affordable choice. "The development of technology, competition and higher sales volumes on the market have really made EVs a great option," he said.

And, as Ihnatovich said, "The No. 1 reason people buy an EV is they want clean air. That's what it's all about."