THE BLOG
06/29/2016 04:12 pm ET Updated Jun 30, 2017

State Electric Vehicle Rebates Need Long-Term Stability: Programs In California And Other States May Be At Risk

With many environmental safeguards on the books and several major cities on their way to 100% clean energy, California is helping guide the United States to a clean energy future. One of the ways the state has been doing that is through electric vehicle (EV) promotion.

Governor Jerry Brown and the state legislature have been staunch advocates for EVs, which are much lower in greenhouse gas emissions than conventional cars, even when factoring in electricity emissions. With support from many advocacy groups, they put in place the Charge Ahead California Initiative, which explicitly outlines a goal of placing 1 million electric vehicles on the road by 2023.

One of the best ways to achieve that ambitious goal has been the state-funded Clean Vehicle Rebate Project, or CVRP, which seeks to promote electric vehicle purchases by reducing the upfront costs of EVs. The project gives consumers $2,500 for the purchase of battery powered electric vehicles and $1,500 for the purchase of plug-in electric vehicles, with an extra $1,500 for lower income customers. For a car with a sticker price of $25,000 or $35,000, a potential $2,000-3,500 rebate, plus a federal tax credit of up to $7,500, is key to making electric vehicles accessible to many Californians.

But now, the CVRP is caught in the crossfires of a political impasse: $1.4 billion CVRP dollars are on hold as an incentive for lawmakers to reach a deal that will extend California's embattled cap-and-trade system. Without the funds, the electric car subsidy, which has helped Californians purchase more than 150,000 low- and zero-emission cars since 2009, may cease to exist. If they applied for the EV rebate after June 10, California EV drivers are placed on a waitlist and may or may not receive their funds.

EV rebate programs need long-term certainty for consumers, dealers, and automakers to feel confident. Without certainty of a rebate, many consumers are hesitant to explore the possibility of EVs. Without knowing when EV rebates will expire, many auto dealers and auto makers are hesitant to invest in providing EV inventory to particular states.

Connecticut, Massachusetts, New York, Pennsylvania, Delaware, and Rhode Island must also solidify their EV rebate programs. In Massachusetts, for instance, nearly 75% of recent rebate recipients indicated the rebate was an important factor in purchasing their electric vehicles. We applaud these states for implementing these programs, but to maintain their efficacy, long-term funding needs to be established. Without careful allocation of funds, rebate programs could go the same way as Illinois' Green Fleets Program, which was suspended in 2014 due to a lack of funding.

Massachusetts and Connecticut just received boosts of $2 million and $1 million, respectively, to support their EV rebate programs MOR-EV and CHEAPR, a promising step, but these programs are still not yet funded with long-term certainty.

By setting longer terms until renewal, state policymakers can better achieve their EV deployment goals. Even though California has experienced relative success in EV adoption, the market is still considered fledgling: only 3% of vehicles on the road are currently EVs, and it's much lower in other states.

For optimal market penetration in the future, stable and long-term government incentives are needed now. For any new product that has societal benefits, consumer rebates or other incentives are an important way to shift public adoption, and cost or uncertainty should not be a barrier to anyone wishing to switch to an electric vehicle.

Sierra Club intern Caroline Heilbrun contributed to this article.