Federal and State Incentives that Help Balance the High Price of Buying Electric and Battery-Powered Construction Equipment

There’s no way to sugarcoat it: Electric construction equipment is more expensive than diesel. Unfortunately, innovation typically comes at a cost. However, as time goes on and more of this equipment becomes available, the price will go down. Until that happens, federal and state incentive programs are available to help offset the cost of this type of equipment. A win-win for your wallet and the environment.

On the federal level, the passage of the Inflation Reduction Act has added tax credits for the purchase of new and used electric vehicles and mobile machinery. This will help users electrify their fleets by lowering the cost of vehicles and charging infrastructure. The U.S. Department of Energy’s Alternative Fuel Infrastructure Tax Credit offers financial incentives for expensive charging infrastructure. Starting this year, the Alternative Fuel Infrastructure Tax Credit provides a tax credit of 30 percent of the cost or 6 percent in the case of property subject to depreciation, not to exceed $100,000. The Diesel Emissions Reduction Act (DERA) Program — available through the EPA — awards grants and rebates to users who make the switch from diesel engines.

When looking at state funding, almost every state offers some sort of incentive, but California leads the charge (get it?) in adopting electric equipment and helping buyers secure funds to help make the switch from their diesel fleet. Two incentive programs include the Clean Off-Road Equipment Voucher Incentive Project (CORE) and the Carl Moyer Memorial Air Quality Standards Attainment Program (Carl Moyer Program). Both are available through the California Air Resources Board.

CORE is a point-of-sale incentive that aims to encourage users to purchase or lease commercialized zero-emissions off-road equipment. The program was launched in 2019 and has offered two rounds of funding so far. The most recent round in July 2022 was the first time CORE included construction equipment in its offerings, and it was met with a lot of enthusiasm.

“When we add a category, we’re really not sure what to expect,” says Jacob Whitson, program manager at CALSTART. “It could be a flop the first year just because it takes time for OEMs to go through the eligibility process and do the outreach to their fleets. It was very successful. We had $25 million available in the construction category, and it was oversubscribed pretty quickly. I think we ended up receiving about $35 million of requests, so there were $10 million of projects we couldn’t fund.”

One interesting stat about the construction category funding disbursement was that almost 90 percent of the vouchers went to rental companies. The other 10 percent of recipients were small contractors. Whitson points out there were no other requests in between the rental houses and the small contractors…

Want to know more? To read the rest of this story, download our ROI Guide to Electric Construction Equipment with JCB right here.