EVs: Still elite but getting more equitable

Source: Debra Kahn, E&E News reporter • Posted: Thursday, December 6, 2018

California’s pursuit of 5 million electric vehicles by 2030 is becoming more equitable in some ways.

While the state’s rebate program is overwhelmingly popular with residents of Los Angeles and the San Francisco Bay Area, some areas of the Central Valley are actually accessing it in a higher proportion relative to their market share, according to data presented at a state workshop yesterday.

And while 75 percent of rebate recipients have household incomes greater than $100,000 and 72 percent are male, only 56 percent identify as white or Caucasian, according to a survey conducted last year by the Center for Sustainable Energy, the nonprofit that administers California’s rebate program on behalf of the state Air Resources Board.

Changes made to the program over the last two years have chipped away at its inequity. An income cap and extra incentives for low-income residents have reduced the proportion of high-income recipients and increased low-income participation to the point where low-income residents are taking advantage of rebates at a higher rate than the general population. While the bottom 25 percent of residents by income made up only 8.2 percent of EV sales, they accounted for 9.1 percent of rebates.

And because the state is aiming at poorer and poorer consumers to make EVs mainstream, incentives are getting ever more important. CSE found that half of EV buyers would not have bought or leased their EV without a rebate, and that the proportion is increasing: 58 percent of buyers in 2016-17 said the incentives were essential, compared to 46 percent of buyers surveyed in 2013-15.

“The incentives are more important today than they were a couple years ago,” said Gil Tal, research director of the University of California, Davis’ Plug-in Hybrid & Electric Vehicle Research Center. “Current consumers are more sensitive than early market buyers.”

On the federal level, tax credits are starting to expire for some of the most popular models. The $7,500 credit will begin to ramp down next year for Tesla Inc., which hit 200,000 sales in June. General Motors Co. is also approaching its sales target. On top of that, the Trump administration has been threatening to end the rebate program early (Greenwire, Dec. 4).

An additional point-of-sale rebate that California regulators approved in October is poised to make up some of the difference. Utilities and automakers are creating a program, funded by the state’s low-carbon fuel standard, that would supply $2,000 rebates on top of the existing $2,500 state rebate for pure electric vehicles.

But funding, which also comes from the state’s cap-and-trade program for greenhouse gases, is not inexhaustible. The state has provided rebates for roughly half of its current population of 450,000 EVs; maintaining that level for 5 million cars will cost between $6 billion and $7.6 billion overall, according to CSE.

Automakers have estimated that it would cost the state about $4.5 billion through 2030.

“That’s not an outrageous amount for what we’re trying to do here,” said Steve Douglas, director of environmental affairs for the Alliance of Automobile Manufacturers, who held up Georgia’s zero-emission vehicle rebate, canceled in 2015, as a worst-case scenario. “They killed their rebate, and they killed their ZEV market.”

The California program also still faces hurdles to reaching the legislatively mandated goal of 1 million zero-emission and near-zero-emission vehicles by 2023, as well as outgoing Gov. Jerry Brown’s (D) executive target of 5 million ZEVs by 2030.

Thanks largely to an influx of Tesla Model 3 deliveries, EV adoption spiked in August, making up about 10 percent of new light-duty vehicle registrations in the state. But based on longer-term trends, the state is only on track to reach 3.1 million ZEVs by 2030.

“If that’s the case, then we’re not on target for that goal. What does that mean for program design?” asked Brett Williams, CSE’s senior principal adviser for EV programs.

Auto industry advocates urged the state to continue its generosity. Allowing second-time EV buyers to apply for the rebate would help replace SUVs with smaller vehicles, said Alisa Reinhardt, director of regulatory affairs for the California New Car Dealers Association.

The workshop was aimed at informing the Air Resources Board’s three-year funding plan for light-duty EV incentives. The agency will hold another workshop after Gov.-elect Gavin Newsom (D) releases his proposed budget next month.