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?