California Upends Electric Vehicles Rebates in New Spending Plan

October 31, 2019 by John O'Dell

The California Air Resources Board stripped car buyers of the ability to claim state rebates on the most expensive electrified cars and has slashed the list of plug-in hybrids eligible for incentives by 50 percent.

The moves come with the agency’s approval earlier this month of $533 million in clean transportation program spending.

Much of that money still will go to incentives to promote the purchase of zero- and low-emission passenger vehicles and commercial trucks and buses.

LUXURY EV REBATES OUT

But in an effort to stretch available funding and quell complaints that too much rebate money goes to buyers of $100,000 Teslas and other luxury electric vehicles, regulators changed what’s eligible for the state’s Clean Vehicle Rebate Project.

The alterations include reducing rebate amounts and limiting eligible vehicles to those $60,000 or less. It also raised the all-electric range for eligible plug-in hybrids to 35 miles from the present 20-mile minimum.

CARB made the change to encourage automakers to quit building so-called compliance cars. Those are electrified models that don’t offer much fuel efficiency improvement over conventional models. But car companies make them to satisfy the minimum requirements to meet various zero- and low-emission vehicle mandates.

The $533 million in total funding for the state’s Low Carbon Transportation Incentives programs is for the present fiscal year, ending June 30, 2020. It represents a 22 percent increase from $437.6 million last year. California has spent more than $2 billion on the Low Carbon program since 2013.

Almost half the Low Carbon money for the fiscal 2019-2020 programs, $238 million, will go to the passenger vehicle rebate program for zero-emission and plug-in hybrid light vehicles, or PHEVs. The state earmarked at least $25 million for low-income purchasers.

TIGHTER REBATE RULES

Two new restrictions on qualifying vehicles also will put more of the passenger vehicle rebate money into the pockets of middle- and lower-income buyers.

The new rules come in the wake of complaints that much of the money in the past has gone to well-to-do buyers of the most expensive EVs. Cars like the Tesla Model S and Model X have average sales prices of around $100,000.

The new rules limit rebates to qualifying vehicles with manufacturer suggested retail prices of $60,000 or less. That will exclude Tesla’s Model S and Model X and offerings from luxury brands such as BMW and Mercedes Benz.

The agency cut the standard rebate amounts by $500, to $2,000 for battery-electric vehicles, $1,000 for PHEVs and $4,500 for fuel cell electric vehicles.

Higher rebates available to low-income consumers remain unchanged at $7,000 for fuel cell cars, $4,500 for battery electrics and $3,500 for PHEVs.

NO PHEV CROSSOVER REBATES

Consumers may find the new restrictions on plug-in hybrid electric vehicles confusing.

The CARB-approved range often differs from the EPA range posted on new-car window stickers. Subaru’s 2019 plug-in-hybrid Crosstrek, for instance, gets a 17-mile EPA rating for all-electric range. But it still qualified because CARB rates it at 25 miles.

Under the 35-mile rule, nine of the 18 plug-in hybrids previously eligible for CVRP rebates no longer meet the requirements.

They include the Crosstrek and the Mitsubishi Outlander PHEV – the only sub-$60,000 crossover plug-in hybrids on the market.

Other PHEVs no longer eligible for rebates are the Audi A3 e-tron, BMW 530e and five Volvos – the S60 T8 and S90 T8 sedans, V60 T8 wagon and XC60 T8 and XC90 T8 crossovers.

TRUCKS AND BUSES

Truck, bus and off-road freight equipment programs will get the next biggest slice of CARB money, $230 million.

Most of that – $142 million – is slated for the state’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project, or HVIP, voucher incentive program for hybrid and zero-emission models.

The state set aside $48 million for a truck loan program aimed at helping small fleets purchase cleaner trucks. It will give out another $40 million for advanced technology projects in the heavy-duty commercial vehicle segment.

The demand for emissions clean-up funding is expected to soar because of California’s new truck smog-check law, banning trucks that don’t meet state-mandated emissions standards. Regulators expect the rule to start in 2023. 

PILOT PROJECTS AND MORE

The state will give out the remaining $65 million for a variety of pilot programs and demonstration projects. The programs will test advanced clean emissions technologies and remove dirty vehicles from the roads.

They include programs to replace diesel buses with electric models; funding for van pools running low-emissions vehicles, and clean vehicle financing assistance for low-income buyers.

Jerry Hirsch October 28, 2019
Hyundai unveiled a fuel cell heavy-duty truck at the North American Commercial Vehicle Show and said it might enter the U.S. commercial vehicle market.

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