In­cen­tives for elec­tric cars

Cal­i­for­nia considering bill to pro­vide re­bates for buy­ers.

Northwest Arkansas Democrat-Gazette - - FRONT PAGE - DANA HULL AND RYAN BEENE

The fed­eral tax credit for elec­tric car pur­chases has an end in sight, but Cal­i­for­nia doesn’t want de­mand for the zero-emis­sions ve­hi­cles to meet the same fate.

The state, long a cham­pion of elec­tric cars, is considering a bill to pro­vide re­bates to elec­tric ve­hi­cle buy­ers at the time of pur­chase, re­duc­ing the sale price right as cus­tomers drive off the lot. The bill, which does not spec­ify the size of re­bates but pro­poses giv­ing more cash to low-in­come buy­ers, looks to set aside as much as $3 bil­lion for the in­cen­tives.

If passed, the pro­gram could help bridge the “val­ley of death” loom­ing on the hori­zon for elec­tric ve­hi­cle de­mand as fed­eral re­bates be­gin to wind down, said Max Baumhefner, an at­tor­ney with the Nat­u­ral Re­sources De­fense Coun­cil’s clean ve­hi­cles pro­gram. “The con­di­tions are right for a tip­ping point to oc­cur but with un­cer­tainty about the state’s pur­chase re­bates and the prospect of fed­eral tax in­cen­tives ex­pir­ing, it could tip in the wrong way.”

The plan — dubbed the Cal­i­for­nia Elec­tric Ve­hi­cle Ini­tia­tive — could be a key step in en­cour­ag­ing the pur­chase of bat­tery-pow­ered ve­hi­cles by bring­ing the price af­ter cred­its more in line with sim­i­lar ga­so­line-fu­eled mod­els. Gov. Jerry Brown set a goal of 1.5 mil­lion zero-emis­sion cars on state roads by 2025. Cal­i­for­nia al­ready of­fers clean ve­hi­cle re­bates for the pur­chase of mod­els in­clud­ing the Chevy Bolt, Nis­san Leaf and Tesla Model S and X, but cus­tomers have to ap­ply for those cred­its af­ter the pur­chase is com­plete, a pos­si­ble de­ter­rent.

The bill would elim­i­nate the need for buy­ers to file tax re­bates with the state, ac­cord­ing to a draft state­ment on the bill seen by Bloomberg News. The in­come-based re­bates would also help as­suage con­cerns that tax dol­lars are help­ing wealthy buy­ers af­ford lux­ury cars like the Tesla Model S, which can sell for more than $100,000.

The leg­is­la­tion, which passed a vote on the as­sem­bly floor last month, faces votes in two state Se­nate com­mit­tees this week, the draft state­ment said.

The bill is mod­eled on the state’s highly suc­cess­ful Cal­i­for­nia So­lar Ini­tia­tive, which re­sulted in a pick-up in rooftop so­lar in­stal­la­tions on homes and com­mer­cial build­ings across the state. Like that pro­gram, the elec­tric ve­hi­cle pro­posal sug­gests the re­bates de­cline over time as mar­ket pen­e­tra­tion rises.

Elec­tric ve­hi­cles are fore­cast to be­come comparable price-wise with com­bus­tion-en­gine ve­hi­cles around 2026 in the U.S., ac­cord­ing to Bloomberg New En­ergy Fi­nance.

The bill comes as the fed­eral tax re­bate be­gins to run its course. Pur­chasers of only the first 200,000 elec­tric cars sold by each man­u­fac­turer in the U.S. are el­i­gi­ble for the $7,500 fed­eral tax credit be­fore it starts to phase out, mean­ing the largest elec­tric ve­hi­cle-mak­ers in­clud­ing Gen­eral Mo­tors, Nis­san and Tesla will lose el­i­gi­bil­ity first, just as their more af­ford­able, longer­range electrics are hit­ting the mar­ket.

This month, Tesla is slated to be­gin pro­duc­tion of its Model 3 sedan, which is ex­pected to start at $35,000 be­fore in­cen­tives or op­tions. Tesla pro­duced roughly 84,000 elec­tric ve­hi­cles in 2016 and plans to make half a mil­lion in 2018, then 1 mil­lion in 2020.

As the na­tion’s coal-fired power plants close, trans­porta­tion is likely to eclipse elec­tric­ity pro­duc­tion as the na­tion’s largest source of green­house gas emis­sions. That’s al­ready true in Cal­i­for­nia, where trans­porta­tion ac­counts for nearly 40 per­cent of the state’s emis­sions.


An em­ployee in­spects un­der the hood of a Volk­swa­gen e-Golf elec­tric au­to­mo­bile in the light tun­nel in­side the Volk­swa­gen AG fac­tory in Dres­den, Ger­many, in April.

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