New data show that Colorado is slightly ahead of the national average in adopting electric vehicles, which car experts attribute to robust rebates in the state.

Plug-in hybrids and pure electric vehicles make up 17.01% of the new vehicle market in the third quarter of 2023, according to Matthew Groves, CEO of the Colorado Automobile Dealers Association.

Nationally, sales of hybrids and electric vehicles stood at 15.8% of all new, light-duty vehicles in the U.S. so far this year, a significant growth from 12.3% in 2022 and 8.5% in 2021, according to the federal Energy Information Administration.

The federal office attributed the gains in part to a drop-off in sales of gasoline and diesel-fueled vehicles, as well as an increase in sales of pure battery-electric vehicles or BEVs. Average prices for BEVs fell 5% in the third quarter of 2023, which is 24% lower than the price peak in the second quarter of 2022.

Meanwhile, average non-electric, light-duty vehicle prices fell less than 0.05%.

The EIA said the luxury class BEVs accounted for 91% of all EV sales.

“What I would interpret from this, when we start looking at luxury purchases coming down,” Groves said, referring to federal numbers, “there’s $7,500 you can get back. But you have to be income qualified and the car has to be under $55,000 or $80,000 if it’s an SUV or light truck.”

That means top-end purchasers of EVs costing $100,000, especially the new lines of electric trucks, won’t be getting any rebates, Groves said.

But, he added, Colorado tax rebates are what’s driving the state’s top position.

“Colorado is putting a lot of money on the line and vehicle purchase incentives that other states aren’t doing, and that’s one of the reasons our numbers are so much better than the national numbers,” said Groves.

Affordability is a problem, but Groves said there are low-end EV models that are more affordable, although they suffer in battery range.

“I would say the two affordable types of EVs are the Chevy Bolt and the Nissan Leaf,” Groves said. “I just did a quick Google MSRP on the Chevy Bolt starts at $27,800. Now, that’s a fairly small car and its range is nowhere near what a Tesla is.”

Groves said while tax credits can offset the sticker price, the complexities of auto financing can turn that tax credit into a debit, depending on the buyer’s credit worthiness. He said a rebate might look good, but that reducing the purchase price of a new car with a rebate may not make up for the increase in one’s monthly payments because of the higher interest rates today.

“Where people are getting jammed up right now is not just a high sticker price, it’s the interest rates,” Groves said. “People with great credit are getting nine to 11% interest rates on cars right now. People with okay credit are getting 12 to 14%.”

Lending, added Groves, is a national market and it’s tied to a person’s credit score — and not to how much money gets taken back in rebates.

“Even before these interest rates really sort of spiked average car payments, we’re going somewhere between $750 and $800 (per month),” Groves said. “It is a very tough market to buy a new car in on account of the interest rates.”

He also suggested that the trade-in value, something he says Americans have counted on for decades, may not be there with an electric vehicle.

As an example, Graves pointed to a 2017 Chevrolet Bolt with six years on a battery that might have a 10-year lifespan. Because new EVs have better technology, and in part because the replacement cost of the battery on an older EV is sometimes higher than the original purchase price of the car, dealers are unlikely to offer much for the older EVs.

“I don’t think anybody in their right mind’s going to go out and just replace a battery on a six-year-old EV,” Groves said. “Because so much has changed between safety features, convenience features, it is only incrementally more money to buy a new car.”

Groves said while government purchase incentives are great for getting new EVs, it also limits the trade-in value of a used EV.

“For decades, Americans have envisioned at the end of this car: ‘I’m going to have some value left,’” Groves said. “I’m just not sure that calculus is going to hold up with an EV. So, when they go to purchase the car after the EV, that’s where I think the shock is going to come in.”

In October, Gov. Jared Polis said Colorado’s electric vehicle sales are “soaring because people know these cars save people money and often have superior performance.”