California Could Limit EV Incentives Based On Income



The Golden State is the golden child of the electric car movement, serving as the home base of Tesla Motors and the fast-selling Model S. California also offers EV buyers a $2,500 rebate, which in addition to the $7,500 Federal tax credit, takes up to $10,000 off the price of an electric car.

But one state lawmaker wants to stop giving away state money to EV buyers who are overwhelmingly wealthy. A new plan would limit the size of the state incentive based on income, and offer additional perks to lower income individuals who want to buy an electric car, reports the LA Times.

The bill was introduced by Democrat Kevin de Leon, who says that well-off EV buyers shouldn’t get free money to buy a car they’d probably buy anyways. He may have a point; 50% of Tesla Model S buyers make over $300,000 a year, and while in California that merely makes one “upper middle class”, it’s worth asking whether these wealthy buyers really need any sort of financial incentive to buy an electric car.

de Leon instead proposes a progressive incentive program, which would offer lower income EV buyers an additional $1,500 for trading in a “high pollution vehicle” in addition to the $2,500 rebate. Poorer families could also get an additional $3,000 for the purchase of a clean air car, which if you’re keeping track, would add up to a total of $7,000 in incentives. Apply the $7,500 Federal tax rebate, and that’s $14,500 off the cost of an electric car, which would mean the Nissan LEAF could be had for around $15,000. As it is though, about 80% of the state tax rebates are claimed by people with an income over $100,000 a year, but just 48% of Tesla buyers ranked the incentives as “important” to their buying decision.

Personally, I feel like if you’re going to incentivize a car purchase, it should necessarily be based in income. The $7,500 Federal tax credit for the Tesla Model S represents about 10% of the cost of the car, and about 20% of the cost of the Nissan LEAF. I always saw the incentives as a way to level the playing field against gas-powered vehicles, as wealthy people tend to be the early adopters of new technology regardless of whether it’s an iPhone or Google Glass or the Tesla Model S. A recent study found that the most attractive incentive wasn’t cash, but rather access to HOV lanes on California’s congested roads.

But I also think giving people a reason to trade in their gas guzzler for an EV, especially aimed at the lower income brackets, could help nudge a few fence sitters into going electric. If I could have bought the Nissan LEAF for the price of my Chevy Sonic (about $18,000) I probably would have; but even with a price cut and a chunky tax credit, the LEAF is just beyond my fiancial reach right now. If the state of Connecticut had chipped in, I probably would be the proud owner of an electric car right now.

How do you think EV incentives should be doled out?

About the Author

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he’s running, because he’s one of those crazy people who gets enjoyment from running insane distances.

  • Offgridman

    This is something that should definitely be done to encourage EV adoption by those with lower incomes. Otherwise they will keep on buying the cheapest of the new ICE vehicles or used ones.
    It needs to be done as an instant or direct rebate though, when you are making that little money and have one or two kids you aren’t paying enough in taxes to get it back as a tax rebate. Have heard this complaint from quite a few people already, they would have bought an EV, but don’t pay enough in federal taxes to get that rebate. So it is only going to those that qualify as middle class or upper income, because they are paying enough in income taxes to get the federal rebate. This also cuts out retirees, which helps explain why you see so many of them still in ICE vehicles with the short trips that they need to make. In order to get a tax rebate you need to have tax liability.