Make Electric Vehicle Rebates Available at the Point of Purchase

, policy analyst | April 18, 2019, 1:42 pm EST
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New legislation proposed in Massachusetts would take a critical step towards making electric vehicles (EVs) affordable to consumers, by offering rebates to consumers at the point of sale.

While Massachusetts offers rebates for electric vehicles through its “MOR-EV” program, Massachusetts currently does not offer rebates at the point of purchase. Instead, customers who purchase an electric vehicle must fill out this application, identifying the VIN number, the purchase details, the dealership and the sales person. If there is still funding available when you make your purchase (and the program is constantly on the verge of running out of funding) the state sends the applicant a rebate check up to 120 days later.

Further, beginning in 2019, MOR-EV rebate levels were cut to just $1,500 for battery electric vehicles and $0 for plug in hybrids. Massachusetts has been forced to cut rebate amounts because the state has not developed a sustainable funding source for MOR-EV. Even with the cutbacks, the program is set to run out of funding in June. Given the central role of EVs in achieving the state’s climate limits, this is a critical issue that must be dealt with by the legislature immediately.

A budget amendment proposed by Representative Jonathan Hecht would address these problems by creating a new instant rebate of for low- and moderate-income consumers. In addition, the Hecht amendment would restore MOR-EV rebate amounts to the level they were in 2018 ($2,500 for battery electric vehicles and $1,000 for plug in hybrids). Taken together, Rep. Hecht’s legislation would make EVs a viable choice for most new vehicle purchasers.

For example, under the Hecht proposal, a middle-class customer interested in a Chevy Bolt with Quirk Chevrolet through Green Energy Consumers Alliance’s Drive Green Program might be able to lease the vehicle for no money down, and an equivalent lease rate of $150 per month on a 36 month lease. That is a great deal for a great car that will improve our environment, our public health and our economy.

We need to make EVs affordable for more drivers

MOR-EV is an important program. Its goal of encouraging the electric vehicle market, so that economies of scale would improve quality and reduce price, remains well founded. Yes, many of the direct beneficiaries are early adopters, tech enthusiasts and people with high incomes. But those initial investments have driven down costs and made these vehicles more accessible.

Today, the challenge facing EVs is how to bring the technology to all drivers. Analysis conducted by the state agencies demonstrate that widespread electrification is necessary to hit the requirements of Massachusetts’s important climate law, the Global Warming Solutions Act. Passenger vehicles are responsible for over 20 percent of global warming emissions in the state. The Comprehensive Energy Plan requested by Governor Charlie Baker and conducted by the Executive Office of Energy and Environmental Affairs looked at several potential scenarios to meet the state’s climate limits for 2030. They found that in even the least aggressive scenario, electric vehicles will have to be 2 of 3 passenger vehicles sold in Massachusetts by 2030. In the most aggressive scenario electric vehicles are 7 of 8 new vehicles sold!

A program that requires consumers to wait months before they receive their rebate is inadequate.

Many states offer EV rebates at the point of purchase

In contrast, most states that offer rebates for electric vehicles do so at the point of purchase. Most also offer larger total rebate amounts. The Delaware Clean Vehicle Rebate program offers rebates of $3,500 for consumers who purchase through participating dealerships at the point of purchase. Auto dealers who participate in Connecticut’s CHEAPR program or New York’s Drive Clean Rebate, both of which offer $2,000 for a battery electric vehicle, likewise do all the paperwork behind the scenes, giving Connecticut and New York consumers an immediate incentive without any paperwork. Colorado’s alternative fuel tax credit of up to $5,000 for a battery electric vehicle can be claimed by financing institutions at the point of purchase. New Jersey exempts EVs from the state’s sales tax, which effectively provides thousands in savings at the point of purchase.

California does not offer rebates at the point of purchase, although the state is working on pilot projects to preapprove income-eligible EV purchasers. However, California does offer much larger incentives for low- and moderate-income residents. California’s Clean Vehicle Rebate Program offers a rebate of up to $4,500 for the purchase or lease of a battery electric vehicle to low-income consumers statewide. People who live in the San Joaquin Valley or within the South Coast Air Quality Management District are further eligible for incentives to trade in an older, high-emissions car or truck for an electric vehicle or hybrid; taken together, these incentives “stack” to up to $14,000 for low income consumers. California is also exploring providing financing assistance to low income consumers.

Data from the Center for Sustainable Energy confirms that states such as New York and Connecticut that have introduced rebates at the point of sale do significantly better in stimulating the market for low- and moderate-income customers than Massachusetts.

Mass Save for vehicles

Making electric vehicle rebates available at the point of sale is one particularly obvious step towards bringing this technology to all consumers. But we need to figure out a larger and more comprehensive approach to vehicle electrification. The decision to purchase an electric vehicle can be complicated. It requires the consumer to consider a number of issues from long-term cost savings to charging infrastructure to access to offstreet parking. We need a program that will address multiple obstacles to vehicle electrification and help the consumer through the process of understanding this technology and making a purchase.

We have a great model for how to do that in the Bay State. It’s called the Mass Save program.

Thanks to Mass Save, all Massachusetts residents can enjoy a free Home Energy Assessment. As part of that assessment, a person comes to your house, explains what your options are, explains what incentives and programs are available to support you. Mass Save also combines direct, upfront rebates with financing assistance, offering zero-interest loans for technologies such as heat pumps, insulated windows, and solar water heaters. Several programs provide greater incentives to low-income residents – or   provide efficiency technologies for free to low-income residents. Mass Save is a big part of the reason why Massachusetts has been consistently rated the most energy efficient state in the country, saving consumers hundreds of millions per year on their energy bills.

Mass Save is an awesome program because Massachusetts has devoted real resources to Mass Save from multiple dedicated funding streams. Massachusetts’ Three Year Energy Efficiency Plan calls for $772 million in energy efficiency funding through Mass Save in 2019. Currently MOR-EV has a 2019 budget of $8 million, which is projected to last the state through June. Nobody knows how the state will fund EV incentives in July. It is very difficult to build a bold or comprehensive program that addresses multiple barriers to EV adoption when MOR-EV is constantly on the verge of running out of money.

We need to do better than this, and we can. Representative Hecht’s budget amendment would represent a good step towards making MOR-EV a program that works for all consumers. Representative Maria Robinson also has a bill that would study a Mass Save program for vehicles. We encourage the legislature to work with the Baker administration to make point-of-sale rebates for low- and moderate-income customers a priority, and to provide the kind of sustainable funding source that can allow our EV programs to reach a lot more consumers.

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  • gsilva220

    Best kind of incentive there is: simply making it cheaper to buy an EV.
    Tax incentives only benefit the richer few, while rebates at the point of purchase benefit the ones that need it most. Canada will go a little further by stopping dealerships from adding hidden fees.