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Simplifying EV Incentives Could Boost Adoption in California

For all of the incentives to aid in the purchase of an electric vehicle in California, dealers and buyers are asking for them to be easier to find, streamlined and available at the time of purchase.

Shutterstock/BELL KA PANG
As electric vehicles become more mainstream in California, consumers, dealerships and even policymakers are looking for incentive programs that feature equity as a North Star.

“We’ve heard from community groups that incentives currently aren’t enough to help those with lowest incomes get into [zero-emission vehicles]. So that means that we need to increase support for them, across the board,” said Lauren Sanchez, senior climate adviser in the office of California Gov. Gavin Newsom.

“We also need to make sure that incentives are available at the point of purchase, or as close to the point of purchase as possible,” she added, speaking at the Veloz Summit on March 9. Veloz is a Sacramento-based EV policy and advocacy group. The theme of this summit was “Consumers, Dealerships and Incentives: Putting People in EVs."

California is easily the nation's leader when it comes to sales of electric vehicles. More than one million have been sold in the state since 2011. In 2021 alone, more than 250,000 EVs were sold, making up more than 12 percent of cars sold, according to Veloz statistics.

The Golden State also offers some of the top incentives, many of them structured to help low-income drivers acquire an electric car. And clearly, the incentives most popular among both buyers and dealers are those that can be taken at the time of purchase, often called “on-the-hood,” by those in the business.

“Incentive should be available up front, otherwise some consumers will still be excluded,” said Quinta Warren, associate director of Sustainability Policy at Consumer Reports, calling attention to buyers who need to whittle away at the sticker price, and cannot always wait to apply for a rebate or tax credit later.

In the case of tax credits, like the much-touted $7,500 federal incentive, to get the full credit, the buyer must first have at least $7,500 in federal tax liability.

“If a household owns $4,500 in federal income taxes, if they purchase an eligible EV, that household only receives a $4,500 income tax credit. So the $3,000 unused portion of full credit is lost and it cannot be applied against the following year’s taxes,” Warren explained.

It should also be pointed out that the $7,500 federal tax credit is a benefit that doesn’t come at the time of purchase, but comes later when the car owner files their taxes.

Some of the incentives available for California buyers include the Clean Vehicle Rebate Program, which provides rebates from $1,000 to $7,000 for the purchase or lease of new zero-emission vehicles (ZEV). These can include electric, plugin-hybrid electric and fuel cell vehicles. Since 2010, the program has issued more than 450,000 rebates totaling more than $1 billion, which accounts for nearly 43 percent of light-duty ZEVs sold in the state, say officials.

Ninety-seven percent of program participants said “the rebate was important to them in making the decision to acquire a ZEV,” said Sanchez.

The Clean Vehicle Assistance Program provides low-interest loans, vehicle purchase grants and vehicle charging incentives for income-qualified car owners. More than 80 percent of participants have a household income at or below federal poverty level.

Another program, which is led by California’s Air Resources Board (CARB), is the Clean Cars 4 All, which provides vouchers to income-qualified participants to be used toward the purchase or lease of a new or used ZEV or hybrid in exchange for scrapping an older gas-burning car. The program also has incentives for transit passes and micromobility.

The California Clean Fuel Reward Program is a time-of-sale program, also funded by CARB, and administered by Southern California Edison. This program can be included in the financing, “which makes it very easy for dealers to apply, and gives immediate gratification to the customer,” said Les Swizer, staff counsel for the California New Car Dealers Association.

The Clean Fuel Reward Program was initially offered as an instant on-the-hood rebate. By the end of 2021 nearly 200,000 customers had received this rebate, and 21 percent of the customers were in underserved communities, and 72 percent of customers replaced an internal combustion engine vehicle.

“Dealers loves this program, because it enabled them to move more EVs, by offering instant savings,” said Swizer.

However, when rules are confusing or funding is uncertain, dealers can find these programs frustrating, Swizer added.

“Dealers want, and are required by law, to be transparent with their customers about vehicle pricing and rebates,” said Swizer.

The governor has proposed a $38 billion climate budget, which includes EV incentives, but also efforts to streamline the application and approval process.

“We do acknowledge that the incentive programs can be a little confusing, and so that’s why we’re spending a lot of time on getting the programs improved,” said Sanchez.
Skip Descant writes about smart cities, the Internet of Things, transportation and other areas. He spent more than 12 years reporting for daily newspapers in Mississippi, Arkansas, Louisiana and California. He lives in downtown Yreka, Calif.

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