State Incentives for Electric Cars Are Off Again, On Again

By · July 11, 2017

As of June 30, 2017, the State of California provided more than $400 million in EV rebates, supporting the purchase of nearly 200,000 plug-in vehicles.

The California Clean Vehicle Rebate program this month is putting new applicants for its incentives on a waiting list. The website where applications are submitted now states, “2016-17 funding will be exhausted before 2017-18 funds will be appropriated and allocated to the project.” The hiatus in payments could last until September when a new legislative session begins. Because priority is given to qualified lower-income applicants, only needs-based applications are currently being processed.

California experienced the same hiatus in payments last year until it was restored months later. Other states—including Georgia, Utah, and Colorado—also temporarily suspended or eliminated EV incentives. Oregon had paused its $1,500 credit until this month when the state passed a new $5.3 billion transportation funding package. That will provide a $2,500 rebate to buyers of a plug-in electric vehicle with a battery pack capacity larger than 10 kilowatt-hours. The rebate is $1,500 for cars with a capacity of less than 10 kWh. (Oregon will also provide $2,500 to low- and moderate-income drivers who replace a vehicle that is at least 20 years old with an EV.)

The federal income-tax credit of $2,500 to $7,500—perhaps the most vital incentive for EV guys—has been more consistent. But that tax credit gradually phases out after an automaker sells more than 200,000 units. Tesla is the first to face the prospect of the phase out—as soon as late 2017. At that point, buyers will receive a gradually reduced credit for about a year until the incentive is eliminated for Tesla customers.

Apparently to address the shortcoming of the federal phase out, California Assemblyman Phil Ting, D-San Francisco, last month proposed the establishment of a $3 billion fund to support EVs. Incentives would go only to EVs with at least 200 miles of all-electric range—effectively blocking out all electric cars except Tesla’s vehicles, the Chevrolet Bolt, and potentially the upcoming 2018 Nissan LEAF. Also, it would bar any automaker from using the proposed new California credit until its federal eligibility has expired.

The size of the rebates could be much higher than current rebates. The figure would be determined by the Air Resources Board—based on bringing the cost of an EV in line with a comparable gas-powered car.

The legislative landscape for electric cars is topsy-turvy. If proposed new California EV incentives sound generous, then the recent imposition of modest new fees (commonly $100 to $200) on electric cars seems particularly odd and stingy. Taxes collected via gas pumps traditionally are used to maintain roads and bridges. Obviously, EV drivers use roads but don’t pay gas taxes, raising concerns of an eventual shortfall in support for transportation infrastructure.

The current count of states that passed EV fees is about 18, including California, which will start collecting $100 per electric car in 2020. Other states with electric car fees reportedly include Colorado, Georgia, Idaho, Indiana, Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, North Carolina, Oklahoma, Tennessee, Virginia, Washington, West Virginia and Wyoming. A recent report from the Vermont state government recommends postponing electric-car taxes until they make up 15 percent of vehicles on the road—in about 2025.

New to EVs? Start here

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