By on June 28, 2017

nissan leaf charging electric car

Federal tax credits for electric vehicles won’t last forever, especially under the Trump administration. While it’s difficult to quantify exactly how many people saw the $7,500 rebate as the deciding factor to “go green,” there is little doubt that it factored into the final purchasing choice of some buyers.

California has made the promotion of zero-emission vehicles a matter of great concern. With General Motors, Nissan, and Tesla all gradually approaching the 200,000-unit quota for vehicles eligible for the tax rebate, the state doesn’t want to see buyers lose purchasing incentives prematurely. With that, California is considering a bill that would provide discounts to EV shoppers at the time of purchase, essentially reducing the sticker price before the car even leaves the lot. 

Presently, the bill does not denote specific amounts for the rebates but, instead, proposes offering more cash to low-income buyers and setting aside as much as $3 billion in total for the incentives. The proposal, which California Assembly member Phil Ting will promote at an event Wednesday in San Francisco, would negate any need for buyers to file with the state, according to a draft statement seen by Bloomberg.

The legislation passed a vote on the assembly floor earlier this month but faces votes in two state Senate committees next week.

While primarily aimed at encouraging cash-strapped citizens to purchase zero-emission cars, the income-based rebates would also be available to affluent shoppers. California intends to allow the rebate to be used for Tesla Model S P100D and Nissan Leaf alike. However, budget-minded shoppers could benefit the most if the California bill can repeat the kind of rock-bottom leasing prices we’ve seen among West Coast EVs lately.

The proposal recommends diminishing rebate values over time as market penetration rises and cost of entry for EVs becomes comparable to internal combustion models. While there is no clear timeline for that, most automotive analysts suggest dates between 2025 and 2030 — which is mainly contingent on battery suppliers.

It’s admirable to see California stepping up to pursue its own interests and ensure the continued health of electric vehicle sales. However, it does leave an elephant in the room. What exactly is going to happen in the rest of the country when the federal government dissolves the $7,500 EV rebate? A lot of the affordability analysis that predicts battery-powered vehicles becoming as cheap as gas-burners by 2025 is heavily contingent on continued governmental support.

Estimates show Tesla and GM hitting their federal tax credit quota in 2018, with Nissan likely to follow in 2019.

[Image: Nissan]

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24 Comments on “California Considering Making Electric Cars Cheaper at the Dealership...”

  • avatar
    SCE to AUX

    “California intends to allow the rebate to be used for Tesla Model S P100D and Nissan Leaf alike.”

    Before some class enviests balk at this, the purpose of the rebate is to substitute an EV in place of a polluting ICE. An expensive ICE pollutes just as much – or more than a cheap one.

    “The proposal recommends diminishing rebate values over time as market penetration rises and cost of entry for EVs becomes comparable to internal combustion models. While there is no clear timeline for that, most automotive analysts suggest dates between 2025 and 2030 — which is mainly contingent on battery suppliers.”

    The pending Model 3, Leaf, and Bolt are just a hair above the average transaction price for mid-size cars, so I’m not sure why the article mentions such remote dates.

    • 0 avatar

      According to Audi, cell costs are down to $112 per kWh. Who knows, but I wouldn’t be surprised.

      Toyota just received a patent for a new solid state battery patent

      I think there will be a steady stream of battery advances that will get the cost of EVs below ICE. My guess is 2025 to 2030 is when we’ll see some big gains in market share. With 400kW charging and sub $100/kWh battery prices, it will make EV ownership easier. Porsche is estimating that half it’s production will be electric in 6 years.

      By then turbo-triples in full size luxury cars will be the norm with turbo-twins for everyone else. ICE cars have another issue. As more vehicles go electric, we’ll probably see a reduction in the number of gas stations. The 2030’s will introduce the concept of range anxiety to ICE owners. In fact, gas stations are already starting to disappear in cities for various reasons totally unrelated to EVs.

      • 0 avatar

        Gas stations are disappearing in major cities mainly because the real estate they sit on is so valuable.

        Even if this hippie-dippie-snowflake dream of electric cars becoming a dominant force in the market comes to fruition the existing base is not going to disappear overnight. I do not expect finding a gas station to become a problem in my lifetime.

    • 0 avatar

      That should read “An expensive ICE pollutes just as little – or less than a cheap one.” Modern gasoline-powered cars are very clean. There really is no good reason for a forced push to electric vehicles. If and when they are truly superior people will buy them with no government-imposed market distortion required.

  • avatar

    When you get to the point where people are buying electrics with a gas engine because they are cheaper (after govnt rebates) than a hybrid, something is wrong. Apparently some Scandinavian countries were doing this – until they discovered that people just bought the cars because they are cheaper, and never bothered to charge their cars. Is anyone really surprised by this? I was tempted to buy a c max electric because it was cheaper than the hybrid and got me free access to car pool lanes.

  • avatar

    “Presently, the bill does not denote specific amounts for the rebates but, instead, proposes offering more cash to low-income buyers and setting aside as much as $3 billion in total for the incentives. ”

    So is that taxable income of $95,000 and below in the PRK?

    “California intends to allow the rebate to be used for [the Fremont assembled] Tesla Model S P100D and Nissan Leaf alike.”

    Fixed that for ya.

    “It’s admirable to see California stepping up to pursue its own interests and ensure the continued health of electric vehicle sales.”

    Corporate welfare is admirable?

    Perhaps the PRK’s Dear Leadership should have embraced Mexico’s 2008 fuel economy standards. Per this study, Mexico’s light cars averaged 34.8 mpg and a combined fleet averaged 30.5 mpg at the time. Per Wiki, the required EPA window sticker amount for 2018’s small car: “”footprint”: 41 sq ft (3.8 m2) or smaller (e.g., 2011 Honda Fit)” was 34 mpg.

    “1.1 The Mexico Light-Duty Vehicle Fleet

    Mexico’s combined vehicle fleet is averaging about 13 kilometers/liter (7.69 l/100km, 179 g CO2/km or 30.5 mpg) in the 2008-2010 time frame (using the CAFE test cycle). Passenger cars were averaging 14.8 km/l (6.8 l/100km, 157 gCO2/km or 34.8 mpg) in 2008.

    Mexico is considering a number of options for setting fuel consumption standards. The objective is to achieve a level of 18 km/l (5.5 l/100km, 130gCO2/km or 42.3 mpg) in 2015. The purpose of these standards would be to reduce greenhouse gases and to curb oil imports.”

    “What exactly is going to happen in the rest of the country when the federal government dissolves the $7,500 EV rebate?”

    There is a chance the EV market will finally experience PRICE DISCOVERY. Oh the horror. Snowflakes may start melting.

    Hybrids are the short to medium term future. PRK forced the industry to waste billions on it’s pet projects. Thanks statism!

    • 0 avatar

      “So is that taxable income of $95,000 and below?”

      The 2016 revisions to the California rebate system restructured the classifications so that income is now linked to the ability to qualify for EV rebates, there were no income caps previously and mainly serving to fuel (pun intended) the purchases by the wealthy of every Tesla that the factory could make. And that’s OK with me, those with money are usually the early adopters of many new technologies which in turn grow the market for it which in turn drives down prices over time. Still EVs are only around 3% of new car sales in the state.

      Under the new rules those at the lowest level of the restructure, those whose household incomes are less than or equal to 300 percent of the federal poverty level qualify for a state rebate of $7000, for fuel cell vehicles, $4500 for the purchase or lease of battery electric vehicles, $3500 for plug-in hybrid; 300% of the poverty level is equivalent to individual earners of $35,640 or less, or a family of four that has a gross income under $72,900. On the other hand those whose incomes exceed $150,000 for single tax filers and $300,000 for joint filers no longer qualify for EV rebates though they are still allowed for hydrogen fuel cell vehicles, all of which is intended to drive EVs further into the mainstream of auto purchases while allowing the early adopters to drive the hydrogen market. Further you have California requiring VW to place a higher percentage of their Electrify America program charges in lower income neighborhoods. While no change is being made to the federal rebate program, expect His Orangeness will likely lead the charge to cancel this altogether.

      I’ll agree before you point this out that this is a redistribution of wealth, the favorite argument of the right yet proffered only when it suits your viewpoint. Why is this a “giveaway” to the electric vehicle industry when a corporate welfare system exists to enrich other industries? A diametric opposite example lies in the fact that California remains one of the largest states for oil drilling but the only one of 22 states that does not place an extraction tax on oil companies. And while every time this has been brought to the ballot the oil industries fight and finance campaigns to defeat even a modest 6% extraction tax, they raised hardly any opposition when then-Gov. Sarah Palin raised Alaska’s tax to 25% of the value of extracted oil and gas with nary a peep from the oil and gas industry. Sometimes, to stimulate an industry or to drive a change, it takes a government to crate the opportunity that most businesses would pass on because they won’t looking beyond the next quarter to make their wealthy shareholders happy.

    • 0 avatar
      Big Al from Oz

      28 Cars,
      There is nothing wrong with the better off in society to help those more needy ……… to a point.

      What is wrong is how and where the money is spent. EV money could be better spent reducing emissions if it was spent in other areas.

      You want social welfare and no industrial welfare. You always lean towards industrial welfare at the expense of social welfare.

  • avatar

    California politicians have rarely missed a chance confiscate people’s money and set it on fire in order to save the world.

    • 0 avatar

      …. PRETEND to save the world. Pretend to the less-than-critical amongst their captive drones, to care one iota about saving anything, besides their own high status positions.

  • avatar

    How many people in California are employed by Tesla?

    Environmental and health issues aren’t not the only reason the state wants electric vehicles to succeed.

  • avatar

    Let’s see, to produce a Tesla battery 10 years of an equivalent V8 car of C02 is produced.

    I would first argue that the sky is not falling and C02 is not pollution. Second unintended consequences are abundant.

    Politicians are fools, chasing a dream that will materializes.

  • avatar

    Will California secede already, please?

    • 0 avatar

      But then who will pay for Alaska and Mississippi?

      • 0 avatar

        California total state debt (state, city and county) is 1.3 trillion. What other state approaches that?

        Spending an additional $3 billion on top of what we’re already spending seems consistent with our representatives’ child like understanding of basic math.

        • 0 avatar

          California’s GDP was $2.46 trillion in 2016, the 6th largest economy in the world. What other state approaches that?

  • avatar

    I’m OK with this. Let California, and any other state, do as they wish with this stuff. At least it won’t be coming out of the pockets of the rest of us.

  • avatar

    Lets see – California debt is 1.3 trillion and they have among the highest taxes and fuel/electricity prices in the nation. Yet they want to implement single payer health care which will cost double their current tax revenues. And of course why not help everyone buy an electric car with some more of that free money. The only thing that will save California from financial drowning is actual drowning by an earthquake that drops the whole corridor between LA and SF into the Pacific.

    • 0 avatar
      Big Al from Oz

      Make those with an income of more than, say, $75 000 a year pay a State “Green” Tax of 5% extra to cover the costs of these programs.

      Then those of the same ilk who want to buy these feel good products are being subsidised by their peers, so to speak.

  • avatar
    Big Al from Oz

    How much more time is needed before EVs can stand on their own four wheels?

    The taxpayer is paying middle and upper class welfare. Maybe there should be a “luxury green tax” levied on those with moderate to high incomes to pay for these “green hairdresser feel good” programs.

    Let the little guy not pay the middle and upper class, they have enough trouble buying and maintaining a second hand sh!tter.

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