California Considers Making Green Car Incentives Income Dependent

Traditionally far more expensive to buy than cars with internal combustion engines, plug-in cars have always been seen as something that only the wealthy middle class can afford. As a consequence, when governments around the world introduce incentive programs designed to make the cost of buying an electric car cheaper, critics claim they are simply there to give tax breaks to the rich.

Plug-in cars might become more affordable for Californians who really need them under SB1275.

Plug-in cars might become more affordable for Californians who really need them under SB1275.

But now the electric-car friendly state of California is considering a change to its state-wide $2,500 purchase rebate program for electric cars and $1,500 rebate program for plug-in hybrids: an income test.

As The LA Times  (Via GreenCarReports) details, a new bill is being considered which would require the California Centre for Sustainable Energy to impose an income cap on those applying for electric car purchase rebates.

Senate Bill 1275, introduced to the California senate back in Feburary 2014 by Senator Kevin de León (D-Los Angeles) tackles a number of important issues related to the retirement and replacement of heavily-polluting vehicles in the state as well as  a slew of changes that would make it easier and cheaper for more Californians to buy plug-in car.

At its heart, SB1275 seeks to tackle the inequality of current electric car prices — according to official records nearly four-fifths of Californians claiming the $2,500 electric car purchase rebate live in households earning more than $100,000 a year.

Look at those claiming $2,500 in state rebates for the Tesla Model S electric sedan and the figures are even worse: more than half of Californian Tesla customers live in households with a total annual income of $300,000 per year.

Cars like the Mitsubishi i-Miev could see a surge in sales from this bill if passed thanks to its already low price.

Cars like the Mitsubishi i-Miev could see a surge in sales from this bill if passed thanks to its already low price.

“A $2,500 rebate to purchase an electric vehicle is not likely to matter to someone earning over $300,000 a year, but it does make a big difference to someone earning $60k a year,” said Sen. de León. “Every community deserves clean air, regardless of wealth.”

SB1275 proposes a layering of incentives as one way to helping those on a lower income afford a new plug-in car. Noting that those on a lower income often own the most polluting, fuel-consuming cars, de León’s bill would make it possible for a lower-income family to receive an incentive for trading in their old car on top of any plug-in incentives, dramatically reducing the price they pay for their new car.

For example, a family of four with an annual income of $53,000 could bundle the $2,500 rebate with a $1,500 incentive for people who trade in their old car for a new one. In addition, the bill proposes a further $3,000 in incentives for low-income buyers, raising the amount for those who live in areas with chronic air pollution problems.

Noticeably, the bill isn’t just about getting people into electric cars. Trade in your old car under the bill, and you could stand to gain $3,000 in public transit passes or car-share program membership.

Either way, the proposed incentives will make the cost of owning a greener car or getting rid of your car altogether far more affordable.

As for the $7,500 federal tax credit offered to those across the U.S. who buy an electric car? While that could help lower the cost of electric car purchases even further, it’s worth noting that the tax credit is only really worthwhile if you pay more than $7,500 per year in tax.

While this will still result in electric cars being out of reach for the lowest-paid Californians, it should dramatically increase the percentage of the population who could at least opt to buy an electric car if they wanted to. In addition, it will help ensure that incentives go to those who really need them — not those for whom a few thousand dollars is an extra week’s work.

At the time of writing, the bill has been passed by the Californian Senate and needs to be approved by the Assembly’s appropriations committee, something it needs by August 31 to gain final passage and be signed into law by State Governor Jerry Brown.

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  • Esl1999 .

    I’ve never seen so many pure electric cars on the roads of LA, on a daily basis, ever. 10 years ago, it was extremely rare to see a hybrid on the road. Today, I see more Toyota hybrids in an hour than many other car brands all day. Let the market properly adopt these cars because they are good products. I’d rather our tax dollars go to zero emission power plants that feed clean electricity to the whole of the country. This would, over time, reduce our expenditures for oil and coal while cleaning up our environment. The public charging stations, except for Tesla’s, need to be overhauled and made more plentiful. Used EVs and new, cheaper, long range EVs will eventually supply the lower end of the market. Tax credits can tempt, but for buyers, it’s the product that will be the ultimate deciding factor.

  • offib

    I wouldn’t say the i-MiEV would see a surge in sales now. I originally thought of that and it could if it wasn’t for the Outlander PHEV. Mitsubishi has a winning formula that Europe and Japan are hungry for. They’re not going to sacrifice a bit of battery production for the i-MiEV any time soon.