Preparing California for the Shift to Electric Vehicles

A Guide for Auto Dealerships

Governor Newsom’s 2020 Executive Order N-79-20 set a course to end the sales of internal combustion passenger vehicles, commonly known as the common car, by 2035. Automotive dealerships regularly consume an average of 18% more electricity compared to typical office buildings.  This causes a significant increase to already astronomical utility expenses, especially considering that PG&E electricity costs have risen 39.5% in the last ten years. For an industry as competitive as car dealerships, finding solutions to issues such as this is how you gain an advantage.  Solar is one such solution that has long term benefits that can help advance your business.

Why Switch to Solar Now?

Federal and local governments are incentivizing the switch to renewable energy with tax credits and grants. Included in the $1.4 trillion omnibus bill is an extension to the Investment Tax Credit (ITC) for solar energy. This extension provides a 26% federal credit through 2022. In 2023, the credit drops to 22%. In 2024, it bottoms down to 10%.

By taking advantage of the ITC now, your cost after the credit will be significantly lower.  As an example, if the price of your rooftop solar installation is $350,000:

That’s a savings of $20k to $75k in federal credits alone if utilized in this timeframe.  Dealerships may also qualify for state, county, and city credits and rebates.  There are also additional tax benefits such as federal depreciation and state MACRS.  By converting your dealership to solar before 2023, you can decrease your total investment by more than 50% with the various tax benefits currently available.  

Current Tax Savings Opportunities

What if I Don’t?

Staying on the power grid means being subjected to increasingly higher electricity rates. For California, the electricity rate jumped by 7.5% in 2020, and between 2010 and 2020 the state’s electricity rates jumped by 39.5%. This is the largest jump in history. California electricity costs are now 70% higher than the average American rate. As a dealership’s stock continues to fill with electric vehicles, electrical consumption will triple current usage. This increase becomes a staggering amount in just a few years.

Let’s look at some numbers:

Current PG&E Rate Structure
Potential New PG&E Rate Structure

That’s more than $300k in savings over a 4-year period, not factoring in rising electricity demands for an increasing EV stock level.  That’s money that can be reinvested in your business or stock.  Why would you leave that kind of money on the table?

What Else Do I Need to Know?

  • The typical payback period is three years.
  • Considering that most commercial-grade systems are expected to last 35 years, that’s about 32 years of pure cost savings!
  • The average return on investment for purchasing solar is about 30% over the course of 25 years.
  • Depending on the size of the system, the 25-year savings can be as much as $3 million.
  • The first year’s savings alone can average $50,000-$75,000.

Download Our Free “Guide to Solar for Automotive Dealerships”

If your dealership is considering the switch to solar power, or simply looking for additional ways to decrease monthly overhead, download our free guide to learn more about the numerous benefits to going solar.

Ready to Talk?

When it comes to adding solar energy to your dealership, think of it as an investment that will actually provide a return. Having DC Solar Electric design a custom solar PV system for your dealership will reduce your operating expenses and protect you from volatile utility costs.

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