Electric car rebates fail state’s policy goals

In an effort to reach lower-income communities, the California Air Resources Board voted last month to amend the Clean Vehicle Rebate Program to limit electric vehicle rebates to middle-class households. The vote addresses an unexpected development that the program created: It was notorious for handing out rebates to households that make over $500,000 annually. However, this new limitation is not enough to secure California’s policy goals. The rebate program must be reworked to ensure that Californians are purchasing as many clean vehicles as possible.

Under this program, rebates vary by car model and electric type — a plug-in Toyota Prius rebate is $1,500, while a Toyota Mirai is $5,000. They are, however, consistent based on the electric category. Though the majority of subsidies did not go to wealthy Californians, what is concerning is that purchases of Teslas, luxury electric cars, are responsible for about 16 percent of all rebate funding — approximately $42 million. The cheapest Tesla vehicle currently available is the Tesla Model S, which costs approximately $75,000. This is far out of reach for most Californians, whose median annual household income is $61,000, according to the U.S. Census Bureau. This means rebates often go to families that do not need them — and, therefore, are not as effective as they could be.

If California wants to put more electric cars on the road, then it must make electric cars affordable for most residents and provide effective incentives for Californians to purchase them. According to the program’s website, only 6 percent of the rebates have gone to buyers in “disadvantaged communities.” More must be done to change this. The $42 million used to subsidize luxury car purchases for many who could already afford such a vehicle laughs in the face of the program’s purpose: to increase accessibility to electric cars.

The money used to subsidize Tesla purchases could have been diverted to make other electric cars cheaper for more Californians. The Nissan Leaf, for example, retails for $29,000, less than half of the value of the Tesla Model S. The $42 million paid to Tesla buyers could have put more than 1,000 Nissans on the road at no extra cost to the purchaser. Considering the already-low price of the Leaf, rebates for that car specifically could reach far more buyers than rebates across the board. Creating incentives for already low-priced electric vehicles puts them within reach of even Californians who make half of the median income.

It is perfectly acceptable to subsidize cars across the board for all potential buyers if the intent were simply to make all electric cars more affordable regardless of the socioeconomic status of the purchaser. However, if the qualifying and determining characteristic of the program’s success is how many electric cars are actually purchased, then rebates must aim for the lowest common denominator. Doing so increases the number of purchases of electric vehicles, which then decreases overall carbon emissions.

The political establishment, however, does not share this view. It only recently voted to disqualify households that make $500,000 or more from subsidies for battery-operated cars, the most common electric vehicle. Despite the vote, these households can still get rebates over three times the value of those for plug-in hybrids if they purchase comparatively uncommon hydrogen fuel cell cars.

Even the most expensive gasoline-driven cars will constitute less than half of a very wealthy Californian’s income. In contrast, even with incentives, most Californians would have to pay half of their annual income for even the cheapest all-electric vehicles. The most expedient way to reduce this inequality in purchasing power is to give more rebates to Californians who could not otherwise purchase electric vehicles.

Keeping this in mind, it is clear that the government ought to emphasize subsidization in the middle class. The current system does not cater to the needs of most Californians or effectively pursue California’s policy goals. As it stands, the rebate program still heavily supports wealthy Californians at the expense of most Californians. If California wants to have more — and not simply more expensive — electric cars on the road, then the rebate system needs to be reworked and re-forged with the express purpose of putting more clean cars in the hands of more Californians.