California's EV Rebate Program Has Run Out Of Funds

Illustration for article titled California's EV Rebate Program Has Run Out Of Funds
Image: Richard Vogel (AP)

California residents have long been able to apply for financial help from the Clean Vehicle Rebate Project, or CVRP, the state’s EV incentive program. However, the project just ran out of funding, potentially affecting thousands of potential car buyers.

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Illustration for article titled California's EV Rebate Program Has Run Out Of Funds
Image: Justin Sullivan (Getty Images)

The CVRP was signed into law in 2007 by Gov. Arnold Schwarzenegger. Initially, the project was funded with just over $4 million, and it was expected to run only through 2015. But as the EV market grew, rebates became the carrot on the stick to get buyers in the door.

With funds now gone from the program, how will this affect demand? I’ve always believed incentives were detrimental to the market because of the possibility of demand being driven by and relying solely on these rebates. That’s not factoring in rebates mostly going to those who can afford the vehicle outright, without the incentive. But do the incentives and sales go hand in hand? There is data to support this.

Illustration for article titled California's EV Rebate Program Has Run Out Of Funds
Screenshot: Jalopnik

In a 2017 study titled “The effectiveness of financial purchase incentives for battery electric vehicles,” the administrative body for the CVRP, the Center for Sustainable Energy, conducted a survey of buyers. In the results, it showed that incentives at both the state and federal level were extremely important to buyers, with California’s rebate more important than the federal tax credit.

This also could have something to do with timing. With the state’s rebate, a check comes in the mail not long after purchase. The federal tax credit is just that, a credit that holds no benefits until tax season.

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The study also smartly suggests that incentives and knowledge of EVs should coincide. This is ideal, as dangling money in front of people to purchase reinforces the need for incentives. Educating consumers about the benefits of the vehicle, and why they should purchase and drive them, could lead to a gradual phase-out of incentives altogether. Other studies show that incentives and charging infrastructure directly correlate.

Illustration for article titled California's EV Rebate Program Has Run Out Of Funds
Screenshot: Jalopnik
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Since the program’s inception, almost a billion dollars has been given out, with nearly $100 million in rebates distributed in the last five years. CVRP executive officer Richard W. Corey called the rebates “a key driver of the EV market,” citing two-thirds of EV owners taking advantage of the program.

Before, applicants were processed on a first-come, first-served basis. But with the program out of funds, applications have changed to a waitlist status.

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Those who don’t want to try their luck with the waitlist can try other regional rebate programs, like the eastern Kern county’s program that offers up to $4,000 or the San Joaquin Valley’s Drive Clean program that offers as much as $3,000. It will be interesting to see what effect this has on the EV market. If demand falls now that the money is gone, it may prove people were just driven by the possibility of getting a check in the mail or a tax break.

Staff Writer at Jalopnik. Dad. Lover of all things with 4 wheels. Weird interest in buses.

DISCUSSION

The implicit assumption in the referenced data is that EV costs are significantly higher than the cost of traditional vehicles.

The idea was supposedly that the prices would decrease with volume and technology improvements. The fact that the subsidy is still a factor is merely proof that the technology costs haven’t decreased at a sufficient pace for the government’s plans.

They were supposed to be cheaper by now, but the (extremely obviously overly optimistic) projections were all way way off.