A version of this article ran in the September issue of Bicycle Retailer & Industry News.
WASHINGTON (BRAIN) — The industry expressed disappointment that the Inflation Reduction Act leaves out an e-bike tax credit and other initiatives that were part of more ambitious but failed climate-change legislation earlier this year. But proponents won't stop advocating for federal subsidies and expanding those on the state level.
"While the fight for a federal incentive is far from over, the state and local levels are ripe for new ideas and action," said Noa Banayan, PeopleForBikes director of federal affairs. "We're doubling down in that arena with new research, resources and campaigns with state and local bike advocacy organizations while we map out a plan for the future of the E-BIKE Act."
For now, helping to get more people on e-bikes might fall more on state and local subsidies. However, Don DiCostanzo, Pedego Electric Bikes' CEO, said because electric car companies can get federal and in some cases state subsidies, the bike industry should continue advocating for both.
"Unfortunately, the bicycle industry does not have the financial and political prowess In Washington to compete against the big spenders like the car companies," DiCostanzo said. "Hopefully, it can still happen, but we are not that optimistic."
Larry Pizzi, PeopleForBikes' e-bike committee lead and Alta Cycling Group's chief commercial officer, said he's optimistic states will develop programs to help entice people to think of bicycles as transportation. "We will also try to use the data from these state incentives to demonstrate the real value a federal incentive program can have."
Colorado moves forward
Pizzi cited state incentive and grant programs in Colorado. A bill there creating a tax credit for employers didn't make it out of the committee stage because opponents considered it too aggressive. A subsequent bill there invests $10 million for incentives and $2 million for share programs in 2022-2023 and allows local governments to create programs meeting communities' needs and provide an equity component.
"The majority of e-bike incentives finding success at the state and local level are targeted, instant-voucher programs that support low-income access to e-bikes and leverage various climate and clean energy funding mechanisms," Banayan said. "At the end of the day, too, one more e-bike on the road instead of a car trip is a good thing for everyone but of course low-income access is a critical equity component."
Denver's rebate program — for e-bikes and e-cargo bikes — is open for a limited number of rebates each month. To get an income-qualified rebate, a resident must meet one of nine criteria.
"We are equitably transforming the market by making biking more affordable and accessible for anyone who wants to participate in our program," said Winna MacLaren, communications manager for the Denver Office of Climate Action, Sustainability, and Resiliency. "Our e-bike rebates are paid for through Denver's Climate Protection Fund, which requires us to spend at least half of our funding in climate programs that advance equity, racial justice, and social justice. Since the August release, all applications for income-qualified vouchers have been approved and more than half of the e-bikes on the streets and trails of Denver went to income-qualified residents, which represents almost 70% of the total program funding."
"We need to be focusing on helping cities to become more safe for biking before focusing on making (e-bikes) cheaper." — industry source
Added Caron Whitaker, The League of American Bicyclists' deputy executive director: "I would say though that, while the ideal benefit would be weighted to help low-income families, anything that encourages the use of e-bike trips over car trips helps with the goal of reducing climate change."
Whitaker noted the electric car provisions in the Inflation Reduction Act are eligible for individuals making up to $150,000.
Levi Conlow, CEO and co-founder of Lectric eBikes, said he has dedicated a team to help get the word out in areas that have programs their customers can qualify for.
"Whatever path state governments decide to take, I choose to focus on what I can control: my price. If the government can support people with subsidies, that's awesome, but as long as I continue to obsess over making my e-bikes as affordable as possible, then I'm doing right by the industry. ... Honestly, other e-bike companies need to focus on getting their business straight for their customers, especially for those who can't afford it."
When the E-BIKE Act was still alive in Congress, Tern Bicycles unveiled a new model in March that was priced at $2,999, which maximized the proposed federal subsidy.
"While we certainly have our eye on all factors to help get more people on bikes, in this case making them more affordable, via subsidy, the market conditions are just too volatile to be able to manipulate the price very much to hit an arbitrary number," said Arleigh Greenwald, Tern Bicycles' marketing and public relations manager. "This is why we pushed hard for no restrictions on subsidies. Incentives on cars were made for expensive Teslas and inexpensive Toyotas and Kias, so why shouldn't that apply to bikes?"
Incentivize usage
Gocycle designer and founder Richard Thorpe said it's not enough to provide subsidies to incentivize purchases.
"Governments need to focus on subsidies that incentivise usage — as in miles ridden — rather than ownership to benefit society in the long term,'' Thorpe said. "Ownership contributes nothing without usage, and discounting products undermines value. We need to reward long-term usage with the view that every mile cycled rather than driven is a net gain to society. ... Governments should support businesses with tax credits for all cycle miles commuted, or at least allow the mileage allowance to be tax free to the employee."
And then there are some in the industry who believe investing in bike infrastructure should be an equal priority.
"I believe we need to be focusing on helping cities to become more safe for biking before focusing on making them cheaper," said an industry source who did not want to be identified. "No matter how cheap bikes are, people need to be safe when riding them or they won't use them."
Tony Ellsworth, who heads The Ride Group e-bike line, agreed, saying infrastructure investment should take precedence over a purchase incentive.
"I grew up in Eugene, Oregon, where 45 years ago, there were terrific bike paths where you could cross downtown as fast on a bike as you could in a car," Ellsworth said. "With an e-bike now, even without the fitness of a young fit distance runner, or the sweat ... a massive population of cars and traffic can be bypassed by using that bike path system. I'd like to see bike specific route development. I think using the e-bike or bike is more important than owning the bike. So rather than incentivize buying a bike, I'd rather see our government money incentivize the experience of cycling in our crowded cities and suburbs."
A 'silver lining'
Banayan noted a "silver lining" in the Inflation Reduction Act is bike infrastructure projects will be eligible to promote equity and mobility through the $3 billion earmarked for the Neighborhood Access and Equity Grants. The program extends funding for rebuilding infrastructure that originally was designed to divide and disadvantage Black, brown, and low-income communities.
The Inflation Reduction Act — which was signed into law by President Joe Biden on Aug. 16 — is less expansive compared to the House-approved Build Back Better Act that died in the Senate earlier this year.
The proposed tax credit would have applied to the purchase of a new e-bike (the first $3,000) up to $900 benefit value, and up to a $4,000 bike. The House legislation also contained the Bicycle Commuter Act, which would have reinstated a tax benefit that was suspended in 2017. Both are missing from the new bill, which does include several tax credits for electric vehicles and making homes energy efficient.
The Inflation Reduction Act includes nearly $400 billion to be invested in energy and climate reform. Democrats had originally called for a $555 billion investment.
"E-bikes are a great tool for combating climate change and improving the way people move, and it's a shame that some don't see that," Lectric's Conlow said. "We hear stories all the time about people replacing their car trips with their Lectric XP. It's disappointing to see the government claiming to be focused on climate change while struggling to get legislation passed. The original act could have electrified a lot of Americans, especially those in lower-income situations."
Despite the initial disappointment, Banayan said her group remains committed to advocating for the E-BIKE Act and Bicycle Commuter Act in Washington.
"The midterm elections could affect a whole lot of things, but it's hard to predict right now what exactly," she said at the beginning of August. "I'm focusing on getting through the next couple weeks before Congress goes on recess before starting to tackle November and later."
