“Old CHEAPR” Quietly Ends – How Fast Will The New Program Ramp?

June was a slow rebate month by any measure with just 57 rebates, of which 41 were PHEV. These numbers continue recent trends of a low-volume PHEV-heavy program. The Toyota RAV4 Prime, the popular PHEV SUV, continues to dominate the rebates. There were no income-limited rebates.

Looking at the trend in the chart in the featured image, one can see the rebate trend increase as more EVs came on the market with the big spike being due to the Tesla Model 3. Then there is a big drop in Q4 of 2019 when the MSRP cap was reduced. There was another trough during the pandemic, followed by a spike due to pent up demand, which has now leveled off at an anemic rate this year. We look forward to seeing more incentives used beginning with July.

Higher MSRP Cap Now in Effect

The components of the new program as legislated in Public Act 22-25 (previously referred to as SB-4 when it was wending its way through the legislature) are being implemented as they are operationally ready. The simplest change was the increase in the MSRP cap to $50,000. That went into effect July 1. There will be over 10 new vehicles that now become eligible, including some important BEVs such as the Hyundai Ioniq 5 and its sibling Kia EV6, Polestar 2, the Mustang Mach-E, and the Tesla Model 3 Standard Range Rear Wheel Drive. Most of the EVs on the market come in multiple trim levels. The base price of the trim level determines a vehicle’s eligibility.

Coming Enhancements

Looser eligibility requirements for the income-limited incentives. The requirement is now an income level that is a maximum of three times the poverty level. These incentives come in the form of an additional incentive for a new EV or an incentive for a used EVs. Used EVs have to be purchased through a dealership (either a new or used dealership, including virtual, i.e. not private sales) to be eligible. DEEP may revise the size of these incentives. We’ll update when we are closer to implementation, which will most likely be near the end of the year.

CHEAPR since 2019 has been residential only, but now it is extended to business, non-profits, municipal, fleets, and tribal entities. This is expected to be implemented as of the fall. After the next board meeting in September, we should have a firmer idea.

$500 rebate for eligible e-bikes (income limited). ETA unknown, but probably around the end of the year.

All licensed drivers are entitled to use the rebate twice (beginning as of June 2021). The newly eligible categories, such as businesses or municipalities get up to 10 rebates per year with a total cap of 20.

Budget Blues?

Most, if not all, state rebate programs have to steward the budget carefully. If the funds are expended before the next replenishment, the program either has to be suspended or the rebate can be granted and paid after the fact. Neither is an appealing scenario. NJ is a case of the former, where the state burns through the money and rebates become unavailable for a period of time.

CHEAPR has had 3 different funding mechanisms at different points since its inception in 2015. Prior to this new relaunch, the legislature had funded the program at $3 million annually since 2019. It isn’t a robust amount and DEEP has been concerned, based on modeling from its consultant, about program over-spending. However, DEEP made cuts to both the size of the incentive and the MSRP cap, which caused the program to be vastly under-spent. The unpredictable variable has been utilization rate. A persistently lower number of eligible purchasers have availed themselves of the rebate than projected.

The higher MSRP cap and the new enhancements will increase the spend substantially. The consultant again modeled that if the utilization rate ticks up, the program could run too hot. Should we be concerned about budget?

I don’t think we have much to worry about in the short term, at least until 2024 and probably later than that. The unspent funds get rolled over and the program has a reserve of over $5MM. The budget for the new program increases from $3MM to roughly $8MM by virtue of the entirety of the clean air fees collected going to support the program. With registration moving from biennial to triennial, there could conceivably be some front-loaded revenue. Many of the new enhancements won’t be ready until late in the year. Only $566,750 in consumer rebates were awarded in the first half of 2022 (plus expenditures for admin and dealer incentives) so the reserve will quite possibly increase. Finally, there will be additional funding coming in from the Regional Greenhouse Gases Initiative (RGGI) auction proceeds. It doesn’t kick in right away and I have not heard a specific number, but a ballpark guess is $2-3MM.

Bottom line – we don’t have to be overly concerned and there will be plenty of time to gather data to forecast and make adjustments if necessary.

Volunteers Needed For Sierra Club Rev Up EV Shopper Study, Round 3

The Sierra Club is fielding a third round of its Rev Up EV Shopper Study and is asking for help from the EV Club. Help is defined as visiting dealerships with a set of questions to ask and items to observe to assess if a dealership is making a serious effort to sell electric vehicles. The last study, like the new one, was national, and was done in 2019. At that point, there were serious deficiencies with respect to dealership commitment to EV sales. The prior study can be found here. These were some of the key findings:

A lot has changed in the macro EV environment since 2019 and we look forward to seeing the new findings. As we did last time, we will ask the Sierra Club to join us at a meeting to discuss the study results.

This link will take you to the Sierra Club page about the study. If you volunteer, they will follow up with you directly. Feel free to let the club know about your experience with the survey. We got some interesting additional texture last time from participating members – more like a focus group to complement the quantitative survey results.

It is not necessary to be a member of the Sierra Club or EV Club to participate. There are questions about the Tesla shopping experience in the study which serve as a useful point of comparison. We appreciate the participation of Tesla owners as well.

One final note. This club supports changing the franchise laws to allow direct sales by EV-exclusive manufacturers. Even though we and other like-minded individuals and organizations have not yet carried the day, these studies, and findings like that pictured above, have been an important data point in our arguments that excluding these companies from doing business in CT serves to slow EV adoption.

25,444 Registered EVs

The new number is the result of 5,441 EVs added to the rolls from January through June (and turnover of 1,379 EVs). This represents virtually the same pace relative to the 5,407 registered in the second half of 2021 and an improvement over the 4,335 year over year comparison.

Registrations are up 19% for the first half of this year and 48% from one year ago.

These numbers come from the DMV website which publishes top line data. The breakdown of battery electric vehicles, plug-in hybrids, make, model, and municipality are not yet available to us. We have a Freedom of Information Act Request on file and expect to receive the information before the end of the month.

This number puts us at 6.06 registered EVs per 1000 residents. As a point of comparison, Maryland just announced that they passed the 50,000 mark, which puts them at 8.13 per 1000 residents.

For our purposes, the definition of EV includes battery electric vehicles, plug-in hybrids, fuel cell vehicles, and battery electric motorcycles. This is what the state tracks. We’ll have the breakdown when we receive the new files.

The state has set goals for itself via the Multi-State Zero Emission Action Plan of 150,000 by 2025 and 500,000 by 2030. A 48% increase in a year isn’t bad, but that percentage pace will at minimum need to sustain itself off of an increasing base, meaning the absolute number increase will have to grow substantially.

$50K MSRP Cap Effective July 1

The first of the changes to the incentive program has been implemented as of July 1, namely an increase in the $42,000 MSRP cap to $50,000. This is still below the average cost of an EV, but at least it helps keep up with inflation to some degree and enables additional models to be eligible, a mix of BEVs and PHEVs, including the BMW 3 Series PHEV, BMW i3, Polestar 2, and Ford Mustang Mach-E. Not all trim levels may fall within the price cap. A reminder, the price cap applies to the base price of the trim level, excluding taxes, title, destination charges, and options. It also excludes any dealer markup. The DEEP website is not 100% up to date with respect to eligible vehicles. If you are in the process of buying an EV that you think should be eligible but you’re being told by a dealer that it isn’t, it could be a matter of the database not being updated. Contact cheapr@energycenter.org. If that doesn’t work, you can reach out to the club.

May Rebate Data

The low level of rebates continues and it will be 2 months at least before we see the impact of the higher MSRP cap, longer for the other program changes. There were 63 rebates – 39 PHEV, 24 BEV – also the typical recent pattern with the Toyota PHEVs getting the most action. Otherwise, there was a modest pop with the Kia EV6, which going forward will have more eligible trim levels under the new price cap. There were no income-limited rebates.

Treading Water – Awaiting New Program Implementation

The data for April have been posted, a low number of 51 rebates. We are in a holding pattern at this point as we await the particulars of the implementation of changes mandated in Public Act 22-25 (a.k.a. SB-4). Rebates declined from 114 in March. There were no income-limited Rebate+ incentives awarded.

During these supply-constrained times, the rebates by model often fluctuate and that was the case in April with the large decline in the RAV4 Prime from 42 to 8. (Note: the numbers in the chart below do not tie back to the total. That is because there are slightly different numbers in the Tableau graphic on the CHEAPR website than the accompanying spreadsheet.) Given that the RAV4 Prime has been so dominant, it actually tilted the balance to a slightly higher number of BEVs, driven by a relatively strong number for the Nissan Leaf and signs of life for the Chevy Bolt and Kia EV6.

Of course, the new legislation is expected to dramatically change things. There are specifics that DEEP has to decide, as well as implementation logistics to be developed. There is a CHEAPR board meeting in a few weeks and we will report on any specific announcements made at that time. Our review of the legislation can be found here.

Modest Increase in March Rebates

The CHEAPR rebate count was up modestly to 96 rebates, 64 of them PHEVs. The big gorilla was the Toyota RAV4 Prime, continuing its run as by far and away the rebate leader. It is quite amazing to see how much the RAV4 has cannibalized the Prius Prime, which was down to only 9 rebates. The Kia Niro placed a distant second with 12 rebates, and the first rebate for the new Kia EV6 appeared. Below is the disposition of all the rebates by model.

Legislation

The major news is that SB-4, the big environmental omnibus bill which includes significant changes to CHEAPR has passed the Senate. The vote was largely along party lines with only one Republican voting in favor. It now goes before the House. Momentum seems to be with it. Since this is a short session, we’ll know in less than a week. We will give a more detailed summary of the changes for CHEAPR if it passes, but the headlines are an increase in the MSRP cap to $50,000, loosening the requirements for the income-limited incentives, and extending eligibility to businesses, fleets, municipalities, and tribal entities.

Low Rebate Levels Continue

There were 50 total rebates awarded in February 2022. January was restated from 40 to 52. There were no LMI (income limited) rebates as far as we can discern. These rebates are of a different amount than the standard rebate and that is how we can identify them.

There were no actions taken to modify the program at the March board meeting. Of course, even if there were, it would take some time to implement. SB-4, the big environmental omnibus bill raised in the legislature has passed out of committee and is now before the Senate. This bill has several CHEAPR related components that would significantly change the program, in particular by raising the MSRP cap and loosening the LMI criteria. (More details here.) It will be known before the next board meeting in June if this bill will become law. Many bills are written for changes to take place in the fall. Realistically, whether it is legislation or DEEP-driven, that is probably the earliest timeframe we are looking at.

The RAV4 Prime dominant distribution of rebates by model continues. Driven by this, the program remains PHEV top-heavy with 34 of the 50 rebates.

The appearance of the VW ID.4 was nice to see but we have not seen evidence of many of this trim level being delivered. We expect this pattern to continue absent an MSRP cap increase. Nissan, maker of the budget-friendly Leaf, is getting ready to introduce its new Ariya EUV, but the starting MSRP is $46K. To the best of our knowledge, GM has still not resumed production of new Bolts as it is still working its way through the recalled vehicles and dealer inventory, though it should be coming to the closing stage of that. The forthcoming Equinox EUV is projected to have a similar price point to the Bolt, but it is 18 months away.

Time to Get Moving

There have been any number of data-focused posts on this blog tracking the details of EV adoption in our state, not to mention references to the goals the state has set for itself via the MultiState ZEV Action Program Memorandum of Understanding. If the goal of a half-million registered EVs by 2030 were to be realized, it would represent roughly 20%, perhaps a bit less, of the entire statewide light-duty fleet. As each year goes by, the trend line has not been rising fast enough. The simple image above shows the historical trend beginning with our first data dump from the DMV in 2017 (blue), to the most current data point (orange), and then onto what the slope would need to be (magenta) for us to achieve the 150,000 interim goal by 2025, along the way to the final 500,000, calculated on a straight line basis. The chart goes to January 2031, which is the same as December 31, 2030. We need every day we can get.

We also need the right policies, such as direct sales and a more aggressive CHEAPR program. Direct sales has come before the legislature numerous times in the past without passing. If SB 214 has been brought up before the committee, it means it most likely has enough votes to pass out of committee. What happens next is harder to predict. We only know that if you don’t try, it won’t happen. We also know that there are more EV owners and advocates every year. The direct sales blog post has information about how you can help.

Help Needed to Remedy Persistently Low Rebate Levels

As can be seen in the chart at the top, the rebate count for January was exceedingly low with only 40 rebates, just over half of the low number of 78 from January 2021.

Continuing recent trends, the Toyota RAV4 Prime plug-in hybrid dominated with 17 rebates, with PHEVs overall accounting for 28 of the 40 rebates.

Some changes could be afoot if SB-4, raised jointly by the Transportation and Environment Committees of the legislature, become law. There are several CHEAPR-related provisions included in the draft text. This is the description to the best of our knowledge.

Environmental Justice Focus

There is a statement of purpose now that focuses on environmental justice communities and lower income individuals. It is phrased as, “The commissioner shall prioritize the granting of rebates to residents of environmental justice communities, residents having household incomes at or below three hundred per cent of the federal poverty level, and residents who participate in state and federal assistance programs, including, but not limited to, the state-administered federal Supplemental Nutrition Assistance Program, state-administered federal Low Income Home Energy Assistance Program, or a Head Start program established pursuant to section 10-16n. The program shall provide rebates of five thousand dollars to residents of environmental justice communities.”

This represents a loosening of rules for income limited individuals, often referred to by the shorthand LMI. Currently, only participants in state and federal assistance plans are eligible for the Rebate+ incentives and very few have been used. There were zero in January. This expansion to 300% of the federal poverty level should expand the pool. The poverty level for a family of 4 is $27,750. Aside from an overly limited applicant pool, the rebate+ incentives arguably suffer from being awarded after the fact. If that can be addressed, it would be up to DEEP and the board to determine the process.

The LMI incentive is increased to $5000. Currently, a BEV carries a total incentive of $4250. It is not clear if $5,000 applies to everything.

Standard Rebate and Higher MSRP Cap

The standard rebate still exists and the rules are below.

MSRP cap increase to $50,000. This is the level where it was before being lowered in 2019 to $42,000, which began the chronic underspending and has more recently resulted in a program tilted heavily toward PHEVs. For example, over the past 4 months, BEVs accounted for 30% of CHEAPR rebates, but represent 59% of all registered EVs.

While the EV Club has pushed for a restoration of the $50,000 level for the past couple of years, in the current inflationary environment, it arguably could be higher. The average transaction price of an EV, according to Kelly Blue Book, is $56,437 (excluding Tesla). The marketplace has blown through the cap level.

Inclusion of Fleets

Expansion of program to include municipalities, businesses, organizations, and tribal entities. These organizations are entitled to up to 10 rebates per year up to a max total of 20. Organizations located in an environmental justice community can receive more at the discretion of the DEEP Commissioner. This could be a big help.

eBikes

eBikes are now included with a rebate of $500 for a bike costing no more than $2,000. In the Transport Hartford/Center for Latino Progress meetings, they have said that $2,000 isn’t enough for a quality bike. We support eBike rebates, along with their efforts to advocate for a higher price cap.

Higher Budget

The CHEAPR budget established in the 2019 legislation is $3MM per year, which has been underspent since the day it started. With the expansion of incentives described in this post, the spend level looks to be considerably higher. The proposed legislation authorizes the program to spend “a minimum of $3MM per year.” This indicates that more funds are forthcoming, but it doesn’t specify a cap. CHEAPR funding comes from the clean air fees collected as part of auto registration. These fees bring in about $8MM per year. $3MM have been going to CHEAPR with the rest having gone to the general fund. The new legislation designates that 57.5% go to transportation funding, though it is possible that other programs could be included.

Board

There are proposed changes to the board, specifically the inclusion of a “representative of an association representing electric vehicle manufacturers,” and a “representative of an association representing electric vehicle consumers.” For the former, we don’t know if this is a way to draw in the new EV-exclusive manufacturers or if it can be filled by an organization such as the Automotive Alliance which represents legacy OEMs. The manufacturer representative is appointed by the Senate President Pro Tempore. The consumer organization representative is appointed by the House minority leader. These replace 2 current positions appointed by the same individuals. Those positions are currently filled and it is not known if those people will depart.

There are also a couple of unfilled board positions, appointed at large by DEEP, and designated for representatives of an industrial fleet or transportation company.

The board is characterized as operating in an advisory capacity so it is not completely clear how much power they have when it comes to setting policy.

Other Legislative Items

In this and other bills, there are other items of note.

• Right to charge legislation to make it easier for residents (owners and renters) to be able to install a charging station.
• Adoption of California medium and heavy duty vehicle emission standards, pending results of DEEP analysis. (Does anyone seriously doubt we desperately need this??) Update: DEEP released their expected endorsement of this measure on March 9th. (This is bill HB-5039.)
• Allowance for school to enter into 10-year contracts for EV school buses. Currently, only 5-year contracts are allowed. For EV buses, 10 years are needed to make the numbers work.
• Accelerated purchases of smart traffic signals (yes, this really does reduce emissions).
• EV charging stations that go beyond the federal Infrastructure bill and highway corridors to cover communities with lack of charging access.
• Active transportation – pedestrian and bike paths.
• Any project involving state funds must not add to carbon emissions. If it does, there needs to be offsets.

Advocacy:

We are supportive this bill. There are many good things in it. We would prefer an MSRP cap of $55,000 for CHEAPR to reflect the realities of the electric car marketplace, as well as a higher cap on the cost of eBikes.

Go here to find your legislators and contact information.

The Transportation Committee and the Environment Committee will hold a joint public hearing on Friday, March 11, 2022 at 11:00 A.M. via Zoom.  The public hearing can be viewed via YouTube Live.  In addition, the public hearing may be recorded and broadcast live on CT-N.com.  Individuals who wish to testify via Zoom must register using the On-line Testimony Registration Form.  Registration will close on Thursday, March 10, 2022 at 3:00 P.M.  Speaker order of approved registrants will be posted on the Transportation Committee website on Thursday, March 10, 2022 at 6:00 P.M. under Public Hearing Testimony.  If you do not have internet access, you may provide testimony via telephone.  To register to testify by phone, call the Phone Registrant Line at (860) 240-0590 to leave your contact information.  Please email written testimony in PDF format to TRAtestimony@cga.ct.gov.  Testimony should clearly state testifier name and related Bills.  The Committee requests that testimony be limited to matters related to the items on the Agenda.  The first hour of the hearing is reserved for Legislators, Constitutional Officers, State Agency Heads and Chief Elected Municipal Officials.  Speakers will be limited to three minutes of testimony.  The Committee encourages witnesses to submit a written statement and to condense oral testimony to a summary of that statement.  All public hearing testimony, written and spoken, is public information.  As such, it will be made available on the CGA website and indexed by internet search engines.

Barry Kresch

41% of CT EVs in Fairfield County

Hartford and New Haven Counties make up the bulk of the rest. When filtered for BEVs, there is even more of a Fairfield County skew.

% BEV by County

In terms of raw numbers.

EVs by City

In the map at the top of the post the bubbles are sized for the number of EVs in each city and the intensity of the color saturation deepens with higher EVs per capita. Below is a bar graph excerpt (due to space limitations of the cities with the highest EV count. Top cities are Greenwich (1371), Stamford (1058), Westport (890), Fairfield (729), and West Hartford (615).

EVs Per Capita by City

A number of the smaller cities, particularly in Fairfield County, rise higher in the ranks.

Make Within City

DMV separates the geo from the vehicle data. Their reason is the 14-10 privacy regulations. I think it is a stretch that PII could be deduced from city level data, but the limitation exists, nonetheless. In this chart, I attempt to knit the files together and come up with estimates of EVs by make within city. I need to use the map format to fit every city on a web page. The bar chart displays the cities with the higher EV counts, along with my disclaimer.

Political Affiliation

This line on this chart is an overlay of EV count by city and the bars are the political affiliations of the voters within each city on a percentage basis (hence, the bars are the same size). There are percentages for Democrats (light blue), Republicans (dark blue), and minor party plus unaffiliated (orange). The minor party plus unaffiliated is mostly the latter. From the looks of this, there does not seem to be a strong correlation of EV ownership with political party, a good thing in our view. This is excerpted due to space limitations.

EV Count and Median Income

This shows a much stronger correlation with income. The bars are cities sorted by median income and the line is EVs per capita (to normalize for population variation). This is also an excerpt due to space limitations. The full chart is on the dashboard.

The upper income skew is a challenge that needs to be addressed by manufacturers, EV advocates and policy makers. We want to see affordable EVs for all. Manufacturers need to serve this segment as well as the affluent. Policy makers can help with incentives and, importantly, taking steps to improve access to charging.

Finally, this is the correlation between EV count by city and public chargers. The line chart displays L1, L2, L3, and the sum of all of them. Again, this is only an excerpt due to space limitations. There is a slider in the dashboard enabling one to display all cities. There is a correlation between EV count and lower numbers of public chargers. To some degree, it is masked in the larger cities where there might be clusters of chargers, L3 in particular, at service areas.