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Are drivers ditching their cars for one of those battery-powered golf carts?

The answer? Well, yes and no.

With gas prices high and the economy low, consumers are taking advantage of lax local rules on “riding” carts to buy souped-up models (called neighborhood electric vehicles, or NEVs) that can take short trips to the local park, to the neighbor’s house for a barbecue, and yes, even to the golf course.

No doubt, interest in NEVs is growing. According to the U.S. Department of Energy, there are about 75,000 golf cart-like vehicles on U.S. roads these days. The federal government is well aware of NEVs – the $787 billion stimulus package enacted earlier this year provides for a $2,500 tax credit for new vehicle buyers.

In addition, laws in individual states are beginning to accommodate NEV users. The Oklahoma Tax Commission is offering a tax credit for up to 50% off “electric motor cars.” Massachusetts recently OK'd the use of NEVs on streets with posted speed limits of 30 miles per hour or less, as legislators there cited the environmentally-friendly nature of NEVs. Texas does one better, allowing NEVs on roads with speed limits up to 45 mph.

At $8,000 to $10,000 for a brand new NEV, bank loans aren’t hard to get. In fact, the major NEV makers, like General Electric Motors can hook you up to a local dealer who can help you with bank financing – just the same as a regular car purchase. Loan rates are similar to regular cars. Thus, a 36-month loan to finance an NEV should come with an interest rate around 5.15%.

According to the Santa Monica Neighborhood Electronic Vehicle Club, insurance for NEVs is approximately half the cost of similar insurance for a gasoline vehicle. Some policies for the lower-end, gas-powered carts can be as low as $100 (usually for private road use only).

Those rates may not stand, however. The Insurance Institute for Highway Safety is looking into safety issues with NEVs, and is weighing the possibility of running crash tests to evaluate safety features of the smaller electric vehicles. As safety issues get closer scrutiny, look for NEV insurance rates to rise.

While insurance rules change from state to state, in virtually all cases NEVs are required by law to carry liability insurance, similar to the insurance policies written for recreational vehicles. Allstate Insurance (Stock Quote: ALL), for example, offers special rates for NEVs under the insurer’s “special autos” category. When shopping for NEV insurance, keep looking for a firm that has experience covering such vehicles. One red flag: if an insurance agent treats NEVs the same as golf carts, keep looking for anther insurance company.

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So with the government easing back on NEV use, what can NEV shoppers expect when they begin looking for a good deal?

According to Global Electric Motorcars, a Fargo, N.D.-based NEV manufacturer, most electric vehicles are 100% battery-electric, with zero tailpipe emissions. They can reach top speeds of up to 30 mph, although higher speeds can be reached with a bigger motor, bigger wheels and some additional mechanical tweaks. GEM claims its vehicles cost two cents a mile to operate, and the machines can be plugged directly into a 110 volt outlet for charging.

Gas-powered vehicles are also available – they’re typically faster, but considering that gasoline costs about $2.70 a gallon, they’re not as energy efficient. Also, most states don’t allow gas-powered golf carts to be driven on streets and roads. Like a regular car, most NEVs come with a Vehicle Identification Number. They also come with seat belts, headlights and turn signals, whereas most golf carts don’t.

NEVs, as they are OK'd for street use, must be insured. The good news is that most NEV policies cost less than $100 annually.

If you’re in the market for an NEV, consider these tips:

  • Cost-wise, expect to pay anywhere between $2,000 and $4,000 for a gas-powered vehicle, and between $8,000 and $20,000 for a decent NEV.
  • Stick to a legitimate dealer. You’ll want to buy a vehicle from a dealer who can provide a warranty and can also service your NEV.
  • When you test drive the vehicle, check the breaks – you should stop easily, and without any skidding, within 10-15 feet of hitting the breaks.
  • If you’re not mechanically inclined, avoid buying any NEV that has a “sold as is” deal attached. That’s usually a sign that the vehicle isn’t up to par, repair-wise. Like a regular car, job one is avoiding the lemons.

On the downside, don’t expect much protection from an NEV. They only weigh around 1,200 pounds, and that’s not going to help much if you’re hit by a two ton car.

But if it’s an energy-efficient, fun ride into town and back that you're looking for, NEVs can really fit the bill – just know what your needs are before you put the pedal to the metal.

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