California Considering Up To $3 Billion In Rebates For Electric Cars

California is looking at a bill that could make available up to $3 billion in rebates for purchasing electrified cars in the state.

The bill, AB 1184, passed in the assembly and heading for the state senate next week doesn’t specify set amounts for incentives, but does emphasize providing more of the funds to low-income consumers living in disadvantaged communities. It would eliminate a current practice in the state’s clean vehicle rebates for consumers who have to file tax rebates with the state.

It would also address complaints that rebates have been giving an unfair advantage to wealthy buyers applying the rebate to pricey cars like the Tesla Model S and Model X.

The state legislative website indicates the program would be set up around declining rebates with an initial rebate going to purchasers of a compact electric car. It would be structured to bring down the net purchase price to make it comparable to the cost of popular compact cars with gasoline engines sold in the state.

The funding program would be structured to increase access and direct benefits for plug-in electrified vehicle purchases to low- and moderate-income consumers, according to the draft document.

Introduced by assembly member Phil Ting (D-San Francisco), and named the California Electric Vehicle Initiative, the bill is tied closely to Governor Jerry Brown’s goal to bring 1.5 million zero emission vehicles to the state by 2025.

Advocates of ZEV sales in California have been concerned that the state’s clean vehicle rebate program has been fading away – and that federal tax incentives will do so, too.

Each automaker faces a cap of 200,000 plug-in vehicles sold before the federal tax credit, which goes as high as $7,500, begins in successive quarters to fade away. Tesla is expected to reach that cap fairly soon with strong sales coming from the Model S and Model X, and the Model 3 coming out later this year in much higher volumes.

President Donald Trump would need to renew the legislative and regulatory procedures of having the incentive extended in congress and enforced by the Internal Revenue Service.

If the California Electric Vehicle Initiative passes through the senate and is signed by Gov. Brown, it could help build a bridge the “valley of death” looming as federal incentives begin to wind down, said Max Baumhefner, an attorney with the Natural Resources Defense Council’s clean vehicles program.

“The conditions are right for a tipping point to occur but with uncertainty about the state’s purchase rebates and the prospect of federal tax incentives expiring, it could tip in the wrong way,” Baumhefner said.

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The bill is modeled on the state’s successful California Solar Initiative, and it does support policies encouraging clean energy being used to charge PEVs.

The solar initiative was credited for increasing sales and installations of solar rooftops on residential and commercial properties. The new PEV proposal before the state legislature would see rebates decline over time as sales and market penetration increase, following the solar initiative’s structure.

California continues to be the hub of PEV sales in the U.S., accounting for about half the sales. Many would like to see that continue regardless of what the federal government decides upon.

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