A Bailout ... for Golf Cars?

Oct. 21, 2009 — -- Bill Morgan has been in business for a dozen years, but he's never seen demand like this: Customers are flocking to his showroom to purchase electric, street-legal golf cars -- golf carts that can be driven on public roadways as well as golf courses.

"The economy is not good for golf right now," Morgan, the owner of Action Golf Cars in Ormond Beach, Fla., said. But the golf cars are "selling so fast, it's amazing."

It's all thanks, he said, to the federal government. The bailout bill that last year helped keep the U.S. banking system afloat also contained lesser-known provisions to benefit other industries, including the electric car business.

Under the Bush administration's Emergency Economic Stabilization Act, buying a plug-in electric motor vehicle can make a consumer eligible for a tax credit of at least $2,500 plus additional cash depending on a car's battery capacity. The $787 billion stimulus package signed by President Obama in Feburary contained similar provisions.

In April, the Internal Revenue Service confirmed that "neighborhood electric vehicles" or NEVs -- a common term for electric-powered golf cars and other low-speed vehicles allowed on public roadways -- bought in 2009 qualified for the tax credit. (The IRS indicated that traditional golf carts used mainly on golf courses -- as opposed to street-legal vehicles -- aren't eligible for the credit. It said in its April statement that "vehicles manufactured primarily for off-road use, such as for use on a golf course, do not qualify.")

Morgan said the battery capacity on 12 cars he sells qualifies them for tax credits of $5,335 each.

In recent months, he and golf car dealers across the country have been advertising the tax credit as an incentive to get buyers in the door -- and it's working, they say.

Unlike traditional golf carts, golf cars that are street-legal must include safety features such as headlights, seat belts, parking brakes and driver's side mirrors, according to federal mandates. They are allowed to reach maximum speeds of 25 miles per hour and individual states decide which roadways the cars may travel on.

Morgan said he's sold 40 cars priced between $6,495 and $10,600 in the last six weeks -- more than $260,000 in sales, which he said is a record for his company. Morgan's supplier, South Carolina-based JH Global Services, Inc., told ABCNews.com that it's seen spikes in sales too.

"A month of sales now is almost equal to a couple of quarters in the past," JH Global CEO Jane Zhang said.