ZM Incentives | ZM Trucks

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A Guide to Securing Funding for Commercial Electric Vehicles

Switching to electric vehicles (EVs) for your business can be a significant investment, but thanks to available government subsidy programs, it can also come with substantial financial incentives. Understanding the funding landscape can help you maximize your savings and successfully integrate EVs into your fleet. This guide will walk you through the process of qualifying for and securing funding, from pre-qualification to post-award responsibilities and what ZM Trucks can do for you.

How Much Funding Can I Qualify For?

Government subsidies for commercial EVs can provide substantial savings—often far greater than the $7,500 tax credit seen with personal EV purchases. As a general rule, the average subsidy for commercial EVs is about $75,000 per vehicle, with even higher amounts available in certain regions. In places like California and the Northeast, many small businesses qualify for over $1 million in total funding. If you are considering making the switch, it is important to remain flexible regarding the vehicle type, configurations, and timelines to maximize your potential funding. Businesses that explore multiple applications while staying aligned with their operational needs tend to secure the most substantial incentives.

What Type of Funding Am I Looking For?

Before determining your eligibility, it is essential to understand the different types of funding available. Incentives exist at the federal, state, local levels, as well as privately funded incentives, and all come in various forms. First-come, first-served grants allow businesses to receive funding on a priority basis, while post-sale rebates provide reimbursements after the purchase is completed. Some programs offer point-of-sale cash vouchers that reduce the upfront cost at the time of purchase. Tax credits may also be available, allowing businesses to offset a portion of the vehicle acquisition cost through tax incentives. Additionally, trade-in programs (scrappage programs – meaning you trade in your older qualifying diesel for a new EV) provide financial assistance for replacing older vehicles with new electric models. In some states, like California, innovative programs support leasing and short-term EV rentals through aggressive state funding. Another critical factor to consider is that, in many cases, multiple sources of funding can be combined (called stacking), meaning a business can utilize multiple incentives at once to significantly lower the total cost of purchasing a commercial EV.

Pre-Qualification

If you are ready to pursue funding, the first step is to assess your eligibility based on three key factors. The first factor to consider is the type of entity your business falls under. There are funding programs designed for private businesses, municipalities, transit agencies, small and large businesses, and even a combination of multiple categories. If this process seems overwhelming, it is important to know that many funding programs are specifically designed to provide aggressive financial support to small businesses, ensuring they can compete with larger companies.

The second factor to evaluate is the product you are selecting. This includes identifying the class of vehicle, the specific manufacturer or original equipment manufacturer (OEM), and any necessary upfitting required to meet the business’s operational needs.

For example, we have seen many businesses able to procure either a Van or short Box truck for delivery applications, and in working with their dealer sales manager, they could potentially qualify for greatly more if they were to choose a larger vehicle. Assuming this does not impact their day-to-day operations of the business, it is likely a better financial choice to purchase cab/chassis trucks over vans. Being flexible here, is where savings can be maximized.

The third and final factor in the pre-qualification process is determining where and how the vehicle will be deployed. This includes the state and municipal region in which the vehicle will be used, as well as the exact location of operation, such as a warehouse, office space, or fleet yard. The goal of the pre-qualification process is to identify specific programs that your business qualifies for by analyzing these three elements and determining the exact amount of funding available.

It is possible to conduct this research independently by accessing publicly available resources, such as the Department of Energy’s website at DOE.gov. However, to save time and ensure that you are maximizing your funding potential, it is highly recommended to consult with an expert, such as an OEM direct sales team or a selling dealer. It is reasonable to request an estimated funding amount BEFORE making any financial commitments to avoid unexpected surprises later in the process.

Voucher Reservation

Once you have pre-qualified, the next critical step is to secure a voucher reservation before making any formal purchases. This step is crucial as it ensures that funding is reserved for your business before any transactions take place. This process is similar to applying for and being accepted into a college, where you receive confirmation that a spot is held for you. A voucher reservation reserves funding in your business’s name for a specified period, typically ranging from six to eighteen months. During this period, you will have time to work with your sales representative to procure vehicles, align with body upfitters to customize the vehicles as needed, secure financing, install necessary charging infrastructure, and plan for the rollout of your EV fleet.

It is important to note that reserving funding before making any formal transactions is a critical rule to follow. If a business purchases a vehicle or makes a financial commitment before securing a voucher reservation, it will likely become ineligible for that funding. Ensuring that the reservation is in place before proceeding with any purchases is essential to protecting your eligibility and maximizing available incentives.

Award Redemption

After your funding has been awarded, the next step is to accept the delivery of your vehicle. This stage of the process is typically managed by the selling OEM direct sales team or your dealer, who will facilitate the funding redemption on your behalf. In most cases, the government will release the funds directly to the selling dealer, meaning that your business will only be responsible for paying the net amount due, which is calculated as the vehicle’s manufacturer’s suggested retail price (MSRP) minus the awarded funding. However, this process may vary depending on the specific funding program, so it is recommended that you confirm the exact funding flow and redemption procedures with your dealer in advance. Understanding how the funds will be applied and whether any upfront costs will be required is essential for financial planning.

Post-Award Responsibilities

While many consider this funding to be “free money,” there are ongoing responsibilities that recipients must fulfill after receiving the award. Most funding programs require businesses to actively use the awarded vehicles and report on their usage for a specified period, typically ranging from three to five years. These reporting requirements ensure that the vehicles are being used in the manner agreed upon during the funding application process. Businesses must comply with the program’s Terms and Conditions, which outline these post-award obligations.

Once the required reporting period has concluded, the business has full ownership of the vehicle and is free to use it in any manner. At that point, the vehicle can be sold, traded, relocated outside of the state or county, or scrapped without any further obligations to the funding program. If any questions or concerns arise during the post-award period, businesses are encouraged to reach out to their selling dealer or the program administrator. Most funding programs have dedicated administrative contacts who can provide assistance via phone or email to ensure compliance and answer any questions.

ZM Trucks Support

We are here to assist you every step of the way. From TCO cost comparisons, product specification matching, upfitting needs, duty cycle fit as well as direct assistance with incentive program management, automated compliance reporting etc.