California Considering Making Electric Cars Cheaper at the Dealership

Matt Posky
by Matt Posky

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]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Stingray65 Stingray65 on Jun 29, 2017

    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.

    • Big Al from Oz Big Al from Oz on Jun 29, 2017

      stingray65, 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.

  • Big Al from Oz Big Al from Oz on Jun 29, 2017

    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.

  • MaintenanceCosts It's not a Benz or a Jag / it's a 5-0 with a rag /And I don't wanna brag / but I could never be stag
  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
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