In California, electric vehicles have been selling so well that the California Air Resources Board (CARB) is discussing ways to reduce the amount spent on the state's Clean Vehicle Rebate Program (CVRP). The program, which provides rebates to EV buyers, is $30 million in debt this year, according to the Capitol Weekly. A new discussion document that was presented at CARB's April 3 meeting lists two main ways that the state could save money while still supporting EV sales.

There could be a $60,000 price limit on plug-in vehicles that CARB would subsidize.

Option one is to reduce the rebate by $500, which would mean pure EVs would get $2,000 and plug-in hybrids would get $1,000. The other option would be to put a $60,000 price limit on plug-in vehicles that CARB would subsidize. Currently, this would only affect two vehicles: the Tesla Model S and the Cadillac ELR. You can find the details in this PDF; see pages 20-23 for discussion on reducing the rebates.

CARB's numbers show that cutting the rebate by $500 would result in "only a minimal short-term impact in the growth of sales of eligible vehicles." The benefit would be that," the budget savings associated with the short-term market delay will more than offset this impact by providing rebates for about 41 percent more vehicles during fiscal year 2014-15 under a fixed budget." As far as limiting the rebate to vehicles that cost less than $60,000, CARB makes the obvious point that, "rebates are more effective in influencing purchase decisions related to vehicles with a MSRP lower than $60,000." CARB thinks this limit will impact no more than two percent of the EV market, "but will allow the program to be more effective in influencing consumer purchase decisions."

Plug In America does not support CARB's proposal. PIA's senior policy advisor, Jay Friedland, told AutoblogGreen that:

At this early point in the market, Plug In America is working hard along side a coalition of automakers, NGOs, utilities and consumers to maintain the CA Clean Vehicle Rebate at current levels with all vehicles included. Tesla is a leading California EV manufacturer - and has been indispensable to creating the market generally - and should not be excluded from the program. Every EV reduces pollution for kids and adults alike and our dependence on petroleum.

We asked Tesla for a statement, but have not heard back. The company told the Capitol Weekly that the proposed changed would "jeopardize the purchase of more than 2,500 Tesla vehicles in the state" and possibly slow down manufacturing.

*UPDATE: This article originally stated that the CVRP funds are used to give out tax rebates. They are actually just rebates.


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    • 1 Second Ago
  • 85 Comments
      Joeviocoe
      • 8 Months Ago
      THIS is what "Disruption" looks like. Tesla, being around the same MSRP as proposed FCVs.... CARB is bowing to the Hydrogen Lobby once again. It is the same tactic they used to limit ZEV credits, because Tesla was actually receiving 7 credits for allowing battery swaps. They placed a limit on pack swapable EVs by only allowing a small fraction of credits to be claimed if they can prove the swap stations are actually used. But FCVs are exempt from this requirement, even if there only exists 10 H2 stations in California. So once again, CARB is unduly influenced by powerful Hydrogen Lobbyists who have help write these changes that limit their biggest competition, Tesla Motors... while exempting any and all future FCVs.
        2 wheeled menace
        • 8 Months Ago
        @Joeviocoe
        It's all a series of games designed to prop up X, Y, or Z company on taxpayer funds, depending on whichever company bribes government the best. It's nice to have government market interference benefit you in some way, but it can also bite you on the ass. Best not to open up pandora's box and allow it. For example, remember the massive tax incentives for buying SUVs, which lead to a massive sales bubble, and then the gas price spike of 2008-2009 happened; by that time, many car companies were based on selling SUVs at that point and suddenly saw their sales model collapse and had to be bailed out. Then the feds spent massive amounts of money on cash for clunkers to destroy those gas guzzling cars and help people buy something greener. All in all, a massive net loss to the economy and an increase of private and public debt!
      • 8 Months Ago
      Our goal was to stop using oil at all. Many people that have shelled out the cash for a Tesla Model S - lets face it, that is what we are talking about here - did so for the first time at that price point. For us, it was way over our price range, and any money that helped us achieve that goal helped. We are no longer support the companies that sell gasoline. We could not do that without buying a Model S. We hope that more people will dump the pump, and right now the only vehicle that allows people to quit the addiction to oil is the Tesla Model S. That is something I want my tax dollars to support. Sad that this is even proposed.
      Letstakeawalk
      • 8 Months Ago
      I think it's a great idea to place an upper limit on the value of a vehicle that gets a tax credit.
        Joeviocoe
        • 8 Months Ago
        @Letstakeawalk
        Why? Please elaborate. Why would the naturally diminishing sales numbers not be effective at curbing the rebate funds? Do automakers not have enough incentive to lower costs, and thereby sell more vehicles?
          Letstakeawalk
          • 8 Months Ago
          @Joeviocoe
          Well, I generally agree with the gist of the article. People who buy expensive cars are going to buy them for reasons other than saving money. I think it is better to give those financial inducements to people who can't afford expensive cars, by way of making more inexpensive EVs (like the Leaf, especially) even more affordable. I've often given my opinion that tax credits should be on a sliding scale, tied to the price of the car and the income of the buyer. Poor people would benefit greatly from eliminating the need to buy gasoline (a much larger percentage of their overall budget), and society in general would benefit by having those same low-income buyers give up their typically poorly-maintained gas guzzlers. Around here, the cheapest cars on the used lost are generally the worst mpg SUVs and sedans, so poorer buyers are forced into them.
          Joeviocoe
          • 8 Months Ago
          @Joeviocoe
          Thanks... I agree with that. I do worry that making credits / rebates so variable, will be difficult for the public to understand and won't be as much of a driving factor. If customers KNOW they will always get $2,500, they are more likely to walk into the store... rather than if they would get more $, but don't know it until they sit down with a financial officer. But what you describe is much fairer.
        Joeviocoe
        • 8 Months Ago
        @Letstakeawalk
        Why? Care to elaborate?
      Joeviocoe
      • 8 Months Ago
      --"When someone purchases a Tesla it is going to help the air just as much as if they bought any other EV." Smartest thing I've heard all day. CARB is trying way to hard to control the market. They need to realize that these rebates, ZEV credits are ALREADY limited only cars that actually sell. So if they are too expensive for the public, few will buy them. If they cannot recharge/refuel fast enough... fewer will buy them. Instead, CARB is actively trying to push for specific qualities of ZEVs that the consumers are not necessarily asking for. You have to ask at this point, are they still concern with air quality, or just want to promote specific types of automakers? There is already EVERY possible incentive to lower costs... and if they put a hard limit on MSRP, then automakers will use that as a reason to keep prices close, but not over $59,999. There are better ways to do this.. and many have already commented on far superior methods of achieving the same goals.
        Joeviocoe
        • 8 Months Ago
        @Joeviocoe
        Disclaimer.... I am a fan of Tesla and I do think that all subsidies and incentives should phase out over time. There should not be a growing dependency on them and I have always been a fan of phasing out rebates when a certain number of sales for a model line have been reached.
        Joeviocoe
        • 8 Months Ago
        @Joeviocoe
        vehicles of a model line that qualify. I just think this idea is an excuse to target Tesla, and keep funds available for other automakers. Which is not fair, as other automakers have been given every opportunity to build the cars that California residents have been asking for since 20 years ago.
      Spec
      • 8 Months Ago
      Hmm . . . kinda odd to see them hit their hometown Tesla . . . but on the other hand, this might give Tesla the extra encouragement they need to sell a cheaper version of their cars. They should be able to hit the $60K mark.
      Joeviocoe
      • 8 Months Ago
      Here is what I am suggesting after reading the PDF and the way CARB came to this conclusion with a survey ("that CVRP rebates are almost three times more effective in influencing purchase decisions on vehicles with a MSRP lower than $60,000"). There is ONLY ONE car above that price... and that is NOT a large enough sample to arbitrarily decide that the MSRP is the leading factor as to the reason why the rebate seems so lackluster by comparison and had little bearing on the buying decision. The Model S is so appealing in so many different ways, that customers want to buy it for those reasons, instead of the rebate. This explains why there is not a gentle curve that follows down in the graph... it is a very SHARP decline, since there is only one vehicle really sampled. This is why surveys should not be trusted, because the are so easy to manipulate to show the conclusions that are preconceived. Does anyone have a copy of the survey question that asked, "how much the rebate influence the buying decision"??
        Rotation
        • 8 Months Ago
        @Joeviocoe
        I can't understand how a person finds it strange that a $2500 enticement isn't a big factor in buying a $100K car. But that aside... Why does it matter? You have to remember the point of the program is not to give away money. It's not to give it to car makers especially. The point of the program is to entice people to buy EVs. If people don't need enticement to buy a Tesla why should the state give them enticements? If they were going to buy the car anyway, then all you are really doing is giving away money to people unnecessarily. Any money meant to incentivize people is best spent on people that would be incentivized by the money. Clearly the percentage of people buying Teslas who would be incentivizes by the money is lower than the people buying the other cars. So it's best to steer the money to other places anyway. Use some logic.
          JakeY
          • 8 Months Ago
          @Rotation
          "If people don't need enticement to buy a Tesla why should the state give them enticements?" I get your argument, but CARB's own graph shows that people DO need the enticement to buy a Tesla (it's still a 17% factor which is quite significant). It's a different story if the number was close to zero. That's why this is still an issue that has to be looked at more closely than just based on this survey.
        Joeviocoe
        • 8 Months Ago
        @Joeviocoe
        --"how a person finds it strange that a $2500 enticement isn't a big factor in buying a $100K car" Actually, I totally agree with the trend that as price goes up, the rebate matters less. I just disagree how they quantified that with only one sample, the Tesla Model S. There are too many other factors that would contribute to the rebate being less of a deciding factor. So instead of just taking CARB's survey and their short sighted conclusion... one should probably follow the natural curve of the other vehicles. --"If people don't need enticement to buy a Tesla why should the state give them enticements?" Now you're asking the right questions. Instead of blaming the MSRP as the sole reason why rebates matter less... lets look at what CARB could do to save money from being spent on purchases that don't need it. The Model S is very popular, so why not put "# of vehicles sold" as a limitation. The Federal Tax Credit has 200,000 vehicles. CARB could place a 50,000 vehicle per model line limit. That would keep incentives for automakers to introduce new cars, and as the vehicle's popularity becomes the overwhelming reason for purchase... then the rebate and tax credits can go away.
          Rotation
          • 8 Months Ago
          @Joeviocoe
          I'm in favor of this program, but I would modify it if I had my druthers. Why defend it? Because this program or a modified version would use the money available to put more EVs on the road than the unmodified program would. And I want more EVs on the road. I said a "per-make" cutoff, not "per-model" as you did, Joevicoe. I don't favor a per-model cutoff either, for what it matters. Car companies are having enough trouble making money off EVs, to artificially force them to revise their cars frequently (if one really gets successful, perhaps more than once a year) to get under a model cutoff would only incur more costs and make it even harder.
          Rotation
          • 8 Months Ago
          @Joeviocoe
          porosavuporo: If there is a possibility of a small company entering the expensive EV market this year they can change the rules preemptively. But there is no such action on the horizon. The companies to enter the EV market in the next year will be BMW and VW. They're not small.
          Joeviocoe
          • 8 Months Ago
          @Joeviocoe
          --"I'd use a roll off as I mention below, not a cutoff" Glad you are not in favor of this idea then. So why defend it so vigorously? --"it disincents car makers to make more EVs than the cutoff number" It would incentivize making more than one model. If the previous model was successful, why would an automaker not want to repeat that success?
          Rotation
          • 8 Months Ago
          @Joeviocoe
          I was asking the right question all along. You are the one having trouble. Look at all my posts below. I've understood this all along, you're just catching up. This stuff is updated every year. I can't see a problem with making it this way (I'd use a roll off as I mention below, not a cutoff) for this year and if some other car gets caught in the fallout, then change the rules next year. I don't favor a per-make cutoff (like the federal $7500 has) because it disincents car makers to make more EVs than the cutoff number.
          Joeviocoe
          • 8 Months Ago
          @Joeviocoe
          poro makes a good point. Many rules and regulations are written in subtle ways to favor larger, more established industry players, while squeezing out any new competition.
          porosavuporo
          • 8 Months Ago
          @Joeviocoe
          >> if some other car gets caught in the fallout, then change the rules next year. The problem with this is that one year worth of credits can either make or destroy a young company, that only has one or two models in its stable Thats the danger of operating in heavily government regulated market - someone can totally destroy your business models with a stroke of the pen, and abrupt changes like these are very dangerous for fledgling new products and industries.
      danfred311
      • 8 Months Ago
      Seems a tad specific..
      Rotation
      • 8 Months Ago
      Well, that's an interesting development. I would think a rolloff would make more sense, take $500 off for each $10K the car is over $40K or something. If the key is to use every dollar in a way that maximizes its leverage, than giving $2500 to people who are buying a $100K car clearly makes no sense. It isn't something that is going to tip them into buying the car or tip them away from it if they don't get it. So that $2500 goes to that person and I'm sure he likes that, but it wasn't used in a fashion which maximizes its effectiveness at eliminating pollution. Heck, it likely didn't eliminate any at all because the person would have bought the car anyway.
        paulwesterberg
        • 8 Months Ago
        @Rotation
        But the manufacturers want full credit for their electric & hydrogen vehicles while screwing Tesla.
        DarylMc
        • 8 Months Ago
        @Rotation
        Hi Rotation I don't disagree with the argument the CARB needs to maximise the benefit so it is going to be a of a juggling act to keep everyone happy. Limiting the vehicle to $60 000 is mainly going to affect Tesla at the moment and I don't think that is a wise idea. I assume CARB exists to reduce local air pollution. When someone purchases a Tesla it is going to help the air just as much as if they bought any other EV. To me it seems a bit unfair if they rule out incentives based on vehicle cost. Here in Australia there are no specific EV incentives but there are efficiency incentives which attract a lower sales tax rate. So here the more expensive the vehicle, the greater the incentive. It is called a Luxury Car Tax and it only applies to vehicle cost above a threshold. There is no government incentive for cheaper, more efficient or cleaner cars eg Nissan Leaf since it is below the threshold. So by comparison I think CARB's current model is quite a fair way to address air quality issues.
          DarylMc
          • 8 Months Ago
          @DarylMc
          Hi Rotation It is not entirely wasted if there is one more EV on the road. I know what you're saying and don't entirely disagree with you. But it doesn't seem like a very fair way to do it. This could directly impact Tesla who has no vehicles which won't be affected and is the only company in the world with a long range EV. If Tesla leased the batteries and sold Model S for under $60k should the owner then be eligible for a refund? Or should Tesla just install a 20kWh battery to keep it under the threshold? I don't think any of those things help EV's or the air in California. CARB's current scheme is reasonable. If they want something most cost neutral there is always the option to penalise the polluter.
          Rotation
          • 8 Months Ago
          @DarylMc
          DarylMc: Yes, it's entirely wasted because in the case I am talking about the car would have sold anyway. You gave away $2500 and didn't put another EV on the road because it was going on the road anyway. In the end, it's not as hard and fast as that, it's more in aggregate, as I mention above. If a $2500 rebate has a conversion rate (convert from no sale to sale) of 20% on $100K cars and 60% on $35K cars, then you can put 3x as many EVs on the road for the same money if you give the rebates for $35K cars and not $100K cars.
          DarylMc
          • 8 Months Ago
          @DarylMc
          Hi Rotation I agree it is likely to give more bang for CARB's buck to have a cut off. I still think it is a bit unfair especially to Tesla, their customers and anyone who wants an EV with a range of greater than 100 miles. I don't think anyone would suggest subsidies can go on for ever so it won't be the last we hear about this. Thanks for the discussion. Since I am on the other side of the world I realise my opinion is not so relevant.
          Rotation
          • 8 Months Ago
          @DarylMc
          But as I just explained, if the $2500 doesn't make someone buy the car when they otherwise wouldn't have, it's basically wasted. So why put it toward $90K Teslas that would have still sold without the rebate when you can tip some people into choosing a $25K EV over a $25K ICE car by putting a $2500 rebate on the EV?
      CaptTesla
      • 8 Months Ago
      Why not ust make it for EV's? And not hybrid EV's like volt, ELR? Makes much more sense.
      Joeviocoe
      • 8 Months Ago
      If CARB's concerns are truly "air quality" then a $100,000 car pollutes just as much (sometimes more) than a $20,000 car.... so shouldn't they continue to incentivize every car equally? The only argument that can be made, is that more people want cheaper cars, so incentives should drive automakers to make cheaper cars. But if each sale gets a specific rebate, then more sales would equal more incentive. The drive to build cheaper cars is already built in.
        Rotation
        • 8 Months Ago
        @Joeviocoe
        The other argument that could be made is the one CARB is using and explained. That $2500 doesn't incent a rich person to buy a $100K car much. For maybe 1 in 5 $100K car buyers they wouldn't have bought the car if it didn't come with a $2500 rebate. While on a cheaper car, the incentive is much higher. Put a $2500 rebate on a $25000 and maybe 3 in 5 buyers (that is, rebate recipients) will have bought the car when they would not have without the rebate. So you can spend $12,500 and put 1 EV on the road or spend $12,500 and put 3 EVs on the road. The second is a better use of money. And thus that's where you put the money.
        Joeviocoe
        • 8 Months Ago
        @Joeviocoe
        Reading more of the PDF... okay, seeing your point. (and where they got the 3 times, didn't see that before) But not convinced of their conclusion and assumptions in their data... Their entire conclusion is based on a SINGLE data point... their surveys of Tesla buyers! The ELR doesn't have significant sales to be even remotely relevant... so the ONLY CVRP vehicle above $60k with any prevalence, is the Model S. Therefore... the conclusion "CVRP survey results show that CVRP rebates are almost three times more effective in influencing purchase decisions on vehicles with a MSRP lower than $60,000" Can easily have been skewed by the unique desirability of the Model S. It is unreasonable that the most adored automobile on the market (a car that has won almost every major award, leads in customer satisfaction and has so many auto journalists singing its praises)... could possibly give surveyed customers a whole lot more reason to buy a Model S, than the rebate? Here is what I am suggesting after reading the PDF and the way CARB came to this conclusion ("that CVRP rebates are almost three times more effective in influencing purchase decisions on vehicles with a MSRP lower than $60,000". There is ONLY ONE car above that price... and that is NOT a large enough sample to arbitrarily decide that the MSRP is the leading factor as to the reason why the rebate seems so lackluster and had little bearing on the buying decision. The Model S is so appealing in so many different ways, that customers want to buy it for those reasons, instead of the rebate. But we cannot say that for sure, that any other EV/PHEV that priced above $60k will be as uniquely appealing as the Model S.
        Joeviocoe
        • 8 Months Ago
        @Joeviocoe
        If they could empirically prove that rich people don't respond to $2500 savings as much as poorer folks... then you may have a point. The problem is... CARB has so many special interest lobbyist in their ear, telling them what the consumer does or doesn't wants. Just like telling them that 15 minute refueling at 9 H2 stations in Los Angeles is somehow more appealing to consumers than a nationwide network of 40 minute recharging. They don't even bother letting the consumer decide. So once again, they are assuming market demand. You mentioned that CARB is "one of the most scientifically-run government organizations [you've] ever seen" Well, unless you can provide an economic study that shows that wealthy folks are 3 times less likely to want to save money, then I would say you are making things up.
          Rotation
          • 8 Months Ago
          @Joeviocoe
          You're using circular logic. You assume that CARB is affected by lobbyists and that explains why the results are bad. You leave no room for the results to actually be accurate by assuming your conclusion up front. 'They don't even bother letting the consumer decide.' Nonsense. CARB isn't prohibiting anything here. The consumer still gets to decide. The incentives just move the tipping point a bit. 'Well, unless you can provide an economic study that shows that wealthy folks are 3 times less likely to want to save money, then I would say you are making things up.' That's not the question. The question is whether people making $100K buying decisions are as influenced by a $2500 rebate as people making smaller (say $35K) buying decisions. And it's completely obvious. Clearly someone looking to buy something that is $2500 is going to be a lot more influenced by a $2500 rebate than a person looking to buy something that is $100M. The difference between a person looking at a $100K decision is less stark a difference from $2500 than the $100M guy, but the difference is still there.
          Joeviocoe
          • 8 Months Ago
          @Joeviocoe
          Actually, I totally agree with the trend that as price goes up, the rebate matters less. I just disagree how they quantified that (3 to 1) with only one sample, the Tesla Model S. There are too many other factors that would contribute to the rebate being less of a deciding factor. --"You're using circular logic." Just saying that because I said that to you in another thread. I used that term correctly. --"You assume that CARB is affected by lobbyists and that explains why the results are bad." No, I have read the CARB literature, and KNOW they are affected by lobbyists. Their ideas and handwriting on deep into the decisions CARB makes.
      Liuping
      • 8 Months Ago
      As long as they cap the sale tax as well I'm all for it. Sale tax on a Model S is around $8000. I paid many, many times the $2500 credit in taxes last year. I've paid far more than my "Fair Share"
      Dave
      • 8 Months Ago
      $60,000 is approximately twice the price of the average car. That is a reasonable cut off. And, yes, I believe it should apply to fuel cell vehicles as well as battery vehicles. Perhaps there should be a higher limit for trucks (real trucks, not crossovers like the Model X or Hyundai Tucson fuel cell) but $60,000 is quite reasonable for cars.
        CoolWaters
        • 8 Months Ago
        @Dave
        The only problem is, TESLA's replace big guzzlers like Jags, Maserati, BMW 5 & 7 series. Therefore, it's very effective at driving down pollution. Do you really want to go there?
        jeff
        • 8 Months Ago
        @Dave
        You get the Same amount regardless of the price so what is the issue????
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