California Considering Making Electric Cars Cheaper at the Dealership

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]