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Why Electric Cars Are Selling in California: They're Free

Stocks in this article: GM GOOG NSANY TSLA

NEW YORK (TheStreet) -- Sales of electric cars in certain California markets such as Silicon Valley vastly exceed electric car sales in other U.S. markets by several orders of magnitude.  The primary reason is that for some Californians, electric cars are completely free to buy and drive.

Wait -- you said free?

Yes, free.  Let me explain.

Let's start with the nominal price of an electric car.  If you are looking for a commuter car, you might be interested in the all-electric Chevrolet (GM),Spark, which at 400 lb.ft. of torque is more powerful than a Ferrari 458.  It has an EPA-certified range of over 80 miles.  Considering that the average American has a commute of 12 miles, and that 80% of Americans are below 40 miles, it handily covers the daily commutes of most people.

The price of the electric Chevy Spark is approximately $28,000. It doesn't have a lot of options.

Now for the subtractions from that starting price:

First, you may be eligible for a Federal tax credit of up to $7,500.  If you make anywhere near $100,000 per year, you are likely eligible for this.  Most tech workers in Silicon Valley therefore qualify.

Now you're down to $20,500.

Second, the state of California gives you a $2,500 rebate in exchange for you driving alone in the carpool lane during rush hours.

Now you're down to $18,000.

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