Title
Resolution to Support Launch of Limited-Time Electric Vehicle Rebate Initiative to Help Abate Rising Fuel Costs (8 Votes Required)
Memorandum
In 2022, 71% of Ann Arbor voters authorized a Community Climate Action Millage, which was a 1 mil levy for 20 years to explicitly fund climate action initiatives. One of the major initiatives launched after the successful passage of the Community Climate Action Millage was a local rebate program. This program was designed to help Ann Arbor residents (and soon businesses) make notable strides in reducing their energy usage, save money, improve health and safety, and advance the City’s sustainability goals.
In the summer of 2024, the City officially launched the A2ZERO Home Energy Rebates, leveraging millage dollars. These rebates focused on home decarbonization, with rebates explicitly for:
• Cold climate heat pumps
• Ductwork
• Heat pump water heaters
• Induction cooktops
• Heat pump dryers
• Electrical panel upgrades
• Battery storage systems
• E-bikes
• Insulation and air sealing
After the first year of the program, the City decided to expand rebates to include yard care electrification. Specifically, in 2025, the City launched rebates to support Council’s seasonal ban on gas leaf blowers (a policy that moves to a year-round ban in 2028). These rebates are available for: snowblowers, leaf blowers, lawn mowers, chainsaws, hedge trimmers, pole saws, string trimmers, edgers, and brush trimmers.
Then, in 2026, the City announced a special rebate program focused explicitly for multi-family, rental properties. This program was launched in April of 2026 and is known as Insulate Ann Arbor. Focused on providing air sealing and insulation services to the large rental market in Ann Arbor, this program is a major incentive to help improve the health, safety, comfort, and affordability of rentals in the City, all while helping landlords and property managers come into compliance with the City’s Green Rental Housing Ordinance.
Combined, these rebates are making a notable difference in the lives of Ann Arbor residents.
Additionally, for over a year, the City has been working with local businesses and property managers to design a commercial rebate program. This program is not yet ready for launch but the Office of Sustainability and Innovations aims to launch a commercial/business specific rebate program in late 2026/early 2027. However, because this program is not yet ready for launch, there is a one-time amount of funds that will not be expended in Fiscal Year 2026 that has been dedicated for rebates.
Given the rising gas and diesel prices and the very real economic impact Ann Arbor families and businesses are facing, the City has decided to launch a limited-time electric vehicle rebate. This rebate will be generally shaped to mirror the federal electric vehicle rebates that are no longer available. Specifically, the City proposes the following:
• Up to $7,500 for a new, all-electric vehicle, purchased by an income qualified City of Ann Arbor household
• Up to $7,500 for a new, all-electric vehicle purchased by a local, City of Ann Arbor business
• Up to $5,000 for a new, all-electric vehicle purchased by a non-income qualified City of Ann Arbor household
• Up to $4,000 for a used all-electric vehicle
This program would run through September 2026 or until all funds are expended. The Office of Sustainability and Innovations has allocated a total of $500,000 to this limited-time program.
Formal qualifications and application guidelines are actively being developed so the initiative can move forward after Council consideration. In general, however, the City anticipates that the following terms and conditions will have to be met:
• All applicants must be residents of, or a registered business in, the City of Ann Arbor.
• There is a limit of one rebate, regardless of category, per household or business.
• The vehicle must be all electric. All electric vehicles, also called battery electric vehicles, have a battery that is charged by plugging the vehicle into charging equipment - they do not use gasoline or diesel. The City will not issue rebates for hybrid electric vehicles or plug-in hybrid electric vehicles.
• The vehicle must be placed in service upon rebate disbursement. A vehicle is placed in service when one takes possession of the vehicle.
• To be eligible, a vehicle must be placed in service after May 1, 2026.
• All applicants must be 18+ years of age.
• Vehicles must be purchased from a dealer. A dealer is a person licensed to sell motor vehicles in a State, the District of Columbia, the Commonwealth of Puerto Rico, any other territory or possession of the United States, an Indian tribal government, or any Alaska Native Corporation.
• To be eligible for the income qualified rebates, a household’s annual gross income (including all members of the household, regardless of relationship) is at or below 120% of the Area Median Income (AMI) for Ann Arbor. This mirrors the existing rebate qualifications.
• Rebates may not exceed 90% of a qualified all-electric vehicle’s cost.
Budget/Fiscal Impact: The Office of Sustainability and Innovations has funding available for this limited-time program in its current rebate contract with Elevate Energy as budgeted in FY 26.
Staff
Prepared by: Missy Stults, Sustainability and Innovations Director
Reviewed by: Kim Hoenerhoff, Financial Analyst
Reviewed by: Valerie Jackson, Assistant City Attorney
Approved by: Milton Dohoney Jr., City Administrator
Body
Whereas, In 2022, Ann Arbor voters authorized the creation of the Community Climate Action Millage;
Whereas, One of the authorized uses of the Community Climate Action Millage is rebates to help residents and businesses decarbonize;
Whereas, Over 1,200 home energy rebates have been claimed since the program’s inception in 2024;
Whereas, To-date, the City’s rebate programs have largely focused on building decarbonization, but rising gasoline and diesel prices are raising awareness of the need for greater support for transportation decarbonization;
Whereas, In 2025, the federal government terminated its electric vehicle tax incentives, resulting in the expiration of federal tax credits for electric vehicles in September 2025;
Whereas, The Office of Sustainability and Innovations has been working to decarbonize the transportation sector by supporting walking, biking, public transportation ridership, land use changes, flexible working schedules, and providing rebates for electric bicycles;
Whereas, The Office of Sustainability and Innovations will continue these practices into the foreseeable future;
Whereas, The Office of Sustainability and Innovations has remaining rebate dollars in its fiscal year 2026 budget that were anticipated to support a new commercial decarbonization initiative, which is not quite ready for release at this time;
Whereas, Staff recommends using this remaining budget amount for a limited-time program to support rebates for all-electric vehicles; and
Whereas, This limited-time all-electric vehicle rebate program will be integrated into the existing A2ZERO Home Energy Rebate program administered by the City’s existing rebate administrator: Elevate Energy;
RESOLVED, That City Council affirm its support for the Office of Sustainability and Innovations’ launch of a limited-time all-electric vehicle rebate program;
RESOLVED, That City Council support integrating this limited-time all-electric vehicle rebate program into the existing A2ZERO Home Energy Rebate program;
RESOLVED, That City Council authorize the City to use remaining fiscal year 2026 dollars allocated for rebates to support this limited-time all-electric vehicle rebate program;
RESOLVED, That City Council authorize the reallocation of $500,000 in FY 2026 funding allocated for home energy rebates in the Climate Action Millage to support a limited-time electric vehicle rebate program and that this funding be made available without regard to fiscal year; and
RESOLVED, That the City Administrator be authorized to take the necessary administrative actions to implement this resolution.
Sponsored by: Mayor Taylor and Councilmembers Cornell, Harrison, Eyer, and Radina