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Dealers Hit The Brakes On EVs

Proposed EPA Rules

Amidst the current contretemps over Connecticut’s stalled efforts to adopt phase 2 of the California emissions standards, known as ACC II/ACT, which stand for Advanced Clean Cars II and Advanced Clean Truck, flying a little less noticeably on the radar screen is a proposed federal EPA rule that could result in roughly two-thirds of vehicles sold by 2032 being electric.

These rules become the default for states not following the California rules and it is good that the gap between the two will be narrower if these rules go into effect. Of course, this being a federal regulatory action, a future administration that is EV-unfriendly could roll them back or loosen them. They can’t do the same to the California rules.

The rules proposed in CT and at the federal level would yield huge reductions in greenhouse gas emissions and provide enormous benefits in public health due to greatly reduced emissions of particulate matter and nitrogen oxides.

The fossil fuel and automotive industries are doing their best to undercut these. We’ve seen the efforts of the Yankee Institute, Heritage Foundation and the misleadingly-named Alliance for Automotive Innovation (lobbying group for the legacy auto manufacturers) to torpedo more stringent emissions standards. While on the one hand, companies such as General Motors and Ford issue press releases promoting how they are aggressively pivoting to electric vehicles, they work behind the scenes to throw sand in the gears. Toyota and Stellantis previously participated in a legal challenge to the waiver California was granted to establish tighter emissions standards that other states could opt-in to follow. (That lawsuit was dropped in 2022.)

4,700 Dealers Send Letter to Biden Administration Against Proposed New EPA EV Rules

One thing that seems a little different at the federal level is that the auto dealerships are playing a more prominent role. Over 4700 dealers have sent a second letter to the Biden administration in January, following an earlier letter in November, that seeks to get the administration to back away from the new standards.

Over 50 Dealers in CT Have Signed The Letter

We have found over 50 dealerships in Connecticut that have signed the letter. They are listed below. These are our neighbors who are actively working against the electrification of transportation to mitigate climate change and improve our air quality. The list is sorted alphabetically by ownership.

 

Dealerships signing letter to Biden administration 2

Dealerships signing letter to Biden administration 1

As can be seen from the ownership field, the signers are mostly large, multi-dealership owners, in some cases operating in multiple states (though only CT stores are listed here). These are well-resourced entities that seek to forestall EV adoption. It is also a snapshot of an industry that has changed considerably from what once was predominantly a mom and pop business model.

One of the owners on the list, Bradley Hoffman, is a member of the CHEAPR board. CHEAPR is the state’s EV purchase incentive program. Presumably, he has no cognitive dissonance over this.

Sign The Electric Vehicle Association Petition – Dealers Don’t Represent Us

The EVA has fielded a petition for consumers to tell auto dealers, car manufacturers, the EPA, and the Biden administration that dealers don’t represent customers, that drivers support the EPA rules to speed the transition to an all-electric future.

 




EV Club 2023 – Year in Review

 

2023 was a notable year for the club as it produced a fully subscribed symposium and began a partnership with People’s Action for Clean Energy (PACE).

Northeast Electrical Vehicle Symposium

The EV Club produced its first conference, along with an EV showcase, in conjunction with the CT Tesla Owners Club. It was fully subscribed and is planned to be an annual event. It was hosted at the zero-emissions, LEED Platinum Hotel Marcel in New Haven, and covered topics ranging from the Advanced Clean Cars regulations to electrifying one’s home, EV incentives, utility programs, local EV-friendly zoning and a keynote from You-Tuber Out of Spec Dave. Recap here.

PACE

We have been working increasingly closely with the PACE (People’s Action for Clean Energy) organization. Our collaboration began with data, as we contributed the vehicle data we obtain to the data they use to analyze municipal energy use. This is a service that PACE offers this free to any municipality – they’ll quantify energy use and show where there are opportunities to move to decarbonize.

We are aligned on policy as both organizations support direct sales, regulations for clean vehicles, the Energy Data Bill of Rights, and expanded distributed and shared solar.

We support each other’s events. This allows each of us to improve coverage throughout the state.

PACE offers a number of services for communities, including supporting HeatSmart campaigns for heat pump adoption, help with solar canopy siting, and data on building efficiency.

Finally, PACE has also been giving the club some financial support. We may be a volunteer organization, but we do have expenses! They also accept donations on our behalf. Go here. After clicking on an amount, you will go to a page that allows you to designate how you would like the donation to be used. Choose “create your own,” and type in “EV Club.”

First Responders

The EV Club continues to support our first responders when they hold EV training events. This year we worked with Fairfield, Windsor Locks, Northville, and Middlebury.

Incentives

Incentives are now more numerous, more complex, and a moving target. We decode them and keep up to date with changes for the federal and state EV purchase incentives, as well as the charging incentives offered by the utilities. This is our incentives page. We have worked with a number of individual members to sort through these and help with questions. We also had the opportunity to speak at length with Eversource regarding how to operationally improve the consumer experience with respect to incentives and dealing with voltage sags and transformer sizes that could limit solar production.

Our near term outlook is that the Foreign Entity of Concern rules, the first half of which take effect in January 2024, will cause a reduction in the number of incentive-eligible EVs.

The other important near term item is the transfer option. This enables the consumer to obtain the incentive as a point of purchase rebate rather than a tax credit. The consumer has an option to do one or the other. Aside from getting the incentive sooner, it also enables people who do not have the tax liability to burn off a tax credit to be able to utilize the incentive.

EV Showcases

We continue to support as many EV showcases as we can by helping to publicize the events, and recruiting owners to exhibit their vehicles. We encourage all EV owners to participate in these as it is a great way to discuss the virtues of driving electric and leave out the politics. We also supported and participated in events by Electric Car Guest Drive in New York.

The Club itself staged 2 showcases, one in May and a second in September as part of the Symposium. We were happy to include a Tesla Model Y patrol car owned by the Westport Police. We thank the CT Tesla Owners Club for working with us on these and for arranging for Tesla to give test drives.

If you would like us to post your showcase event, please see this post about the information we need.

Speaking Engagements and Tabling

  • Stonington Energy Fair
  • Fairfield Warde High School
  • Interreligious Eco-Justice Network Forum on Advanced Clean Cars II, Greenwich
  • Central Connecticut State University

Zoom Meeting Presentations

  • SPAN – smart panels – what they’re about and what is involved in installing one in your home
  • Renowned teardown artist and automotive engineer, Sandy Munro, tells it like it is
  • IRA deep-dive into the EV incentives

Policy/News

  • Rivian, after fending off a dealership lawsuit, has broken ground on a service center in Shelton.
  • First Tesla Magic Dock in CT.
  • Participation continues with the national Electric Vehicle Association Policy Committee.
  • The last couple of years have been difficult regarding state level environmental legislation. Advanced Clean Cars II is stalled. It is possible it may come back but not certain. We continue to support a direct sales bill and the Energy Data Bill of Rights.
  • EV Club CT had a presence at the Cybertruck Reveal Event.
  • EV Club is happy to work with municipalities on EV charging, such as the new installation of 12 level 2 chargers (80 amp) in Westport.

EV Club Invited to Grand Opening of Tesla Sales and Delivery Center

This is the facility that is being built on tribal land at the Mohegan Sun Casino complex. The event is 12/20 and registration is here.

Much of the reporting in the mainstream press about this facility labels it as a loophole or a way to skirt the law. We believe this to be a mischaracterization. Tesla is following the law. Federally recognized tribes hold sovereign power on tribal land. It is up to the Tribal Council to approve such a facility and they don’t run scared from dealerships.

Data

We were able to bring the EV Dashboard back, tracking the level and characteristics of EV adoption in Connecticut. Access to data was granted courtesy of Atlas Public Policy, but sourced from the Department of Motor Vehicles.

Continued tracking of EV rebates by dealership, which is our proxy for which dealers are EV-friendly (applicable, obviously, only to those that sell CHEAPR-eligible vehicles). This typically gets updated around March of each year – it depends on when the data get published by DEEP.

Videos!

Find them on our YouTube channel

  • New electric police patrol cars in Westport and Wethersfield (Tesla Model Y and Ford Mustang Mach-E, respectively)
  • Owner video – Andre and his Polestar 2
  • Fairfield First Responder EV training
  • Sandy Munro and Corey Steuben riffing about all things EV and batteries (Meeting recording)
  • Inflation Reduction Act Deep Dive (Meeting recording)
  • Tesla Magic Dock Closeup
  • Smart Panel discussion with SPAN (Meeting recording)
  • Hotel Marcel Tech Deep Dive – Bruce Becker, Paul Braren, Will Cross

 




Banning The “Ban With No Plan” Is Not a Plan

Global Temperature Rise is Already 1.2 degrees Celsius above baseline

The reporting coming out of COP 28 is that the mean temperature is already 1.2 degrees Celsius above the pre-industrial baseline and headed to exceed the critical 1.5 degree threshold by the end of this decade. With 10 months of data in hand, 2023 has already been declared the hottest year on record by a margin comfortable enough to be “safe” regardless of what happens in November and December. There is urgency here. It is not just about whether change will happen but how fast.

Transportation Is Low Hanging Fruit

We have to decarbonize everything, but some sectors of the economy are a heavier lift than others.

  • Extracting CO2 from the atmosphere and sequestering it in concrete: hard
  • Producing enough green hydrogen to power heavy industry: hard
  • Aviation: hard
  • Ground transportation: relatively easy.

In Connecticut, the transportation sector is the responsible for a larger amount of greenhouse gas (GHG) emissions than any other at about 38% of the total, as reported by the Department of Energy and Environmental Protection (DEEP). EV models are becoming more plentiful all the time and generous incentives are available for purchase and charging.

Advanced Clean Car Regulations II

Connecticut, which has been following California vehicle emission rules for ~20 years and is a signer of the Zero Emissions Vehicle Memorandum of Understanding, has been going through the process of adopting the second phase of the California standards. The first phase expires in 2025.

These regulations, which apply to all classes of vehicles (the earlier regulations only applied to light-duty vehicles) would dramatically lower GHG, as well as particulate matter and nitrogen oxides. Aside from climate benefits, there are significant public health and economic benefits. CT suffers from terrible air quality, and we have the asthma rates to prove it.

A more detailed description of ACC II benefits with data are in this earlier post.

The regulations would require the phasing out of the sale of new internal combustion (ICE) light duty vehicles (and reducing the proportion of ICE heavy duty vehicles) by 2035. A portion of the EVs are permitted to be of the plug-in hybrid variety. ICE vehicles already in the fleet are not banned, nor are sales on the secondary market. It does, however, provide opponents a convenient line of attack as a “ban on gas cars.”

Phase 2 of Advanced Clean Car Regulations Blocked by Legislative Regulation Review Committee

Against this background, the legislature has blocked ACC II. The final step of the approval process, the step that follows legislative authorization, DEEP rule making, public comment, DEEP response, and a determination of legal sufficiency by the Attorney General’s office, is for a bipartisan legislative committee to make a determination regarding whether the regulations comport with legislative intent. The remit of the committee is narrow, but a GOP-led effort took it upon themselves to decide to overrule what had been authorized.

The bipartisan committee is made up of 8 members of each party, unlike the legislature as a whole where the Democrats hold a 2:1 edge. The regulations needed at least a tie vote to pass but all of the Republicans were against it and two Democrats, reportedly Senators Osten and Hartley, were wavering with at least one being a likely negative vote. With prospects cloudy, the governor pulled the regs before the vote.

It’s Not Over

The legislature could still authorize it. Democratic leadership will take the temperature of the caucus early in the coming week and then decide whether to raise it before the full body. The outlook isn’t particularly encouraging at this point.

Freedom!

House Minority Leader Vincent J. Candelora, R-North Branford, an opponent of the regulations, as reported in the CT Mirror, said,  “This is about protecting the residents of Connecticut and providing them choice.”

It feels good to know we are now protected, that we have the freedom to breathe dirty air, the freedom to do nothing to mitigate climate change, and the freedom to signal that new green economy jobs should go to other states.

In effect, Mr. Candelora and his colleagues are saying, “Let the market drive EV adoption,” a.k.a. the “business as usual case.” The point of policy is to accelerate the curve faster than BAU. A GOP flyer labels this the “ban without a plan.” This removes the context because, in fact, there is a plan. These are a few points regarding objections raised about the grid, charging infrastructure, and EV costs.

Grid

  • As we move to a carbon-free society where everything is electric, it will be necessary to upgrade the grid. That is why DEEP and the Public Utilities Regulatory Authority (PURA) have a grid modernization docket.
  • EVs are relatively grid-friendly since so much of the charging is done at night, during off peak times. This is a slide from the presentation that United Illuminating gave at the Club’s Northeast Electric Vehicle Symposium in September illustrating the benefits of off-peak EV charging: Grid Optimization using electric vehicles from United Illuminating
  • There is already a program in place that incentivizes Eversource and UI customers with home charging to charge during off-peak periods.

Charging Infrastructure

  • There are over 700 public charging stations with over 2000 ports in CT, per the Department of Energy for the roughly 35,000 EVs, of which about 23,000 are fully electric. (And, yes, we know that vehicles transiting the state need to charge as well.) But, we’re not starting from a bad place. The number of chargers needs to grow along with the increase in EV adoption, and the chargers have to be available throughout the state.
  • The federal Infrastructure and Jobs Act was passed about 2 years ago. Between the federal funds and state matching funds, there will be over $60 million invested in public EV charging stations. There have been no shovels in the dirt as yet, as the process took a while to get finalized. DOT expects installations to begin in 2024.
  • There are incentives for the purchase and installation of EV chargers for both residential and commercial customers, developed by PURA and available through Eversource and United Illuminating. Some of the municipal utilities are offering incentives, as well.
  • EV chargers are eligible for grants from the pool of Volkswagen “dieselgate” settlement funds.

EV Costs

  • It is true that the purchase price of an EV is higher than a comparable internal combustion (ICE) vehicle. But it’s not that much higher, at least according to recent data published by the Kelly Blue Book:

EV vs ICE purchase price

These prices do not take into account incentives. At the present moment, assuming all qualifications are met, a buyer of a new electric vehicle can get a $7500 federal incentive and a $2250 CT incentive. CT also offers a higher incentive for lower income buyers. See our incentives page for more detail.

  • Including operating and maintenance costs, in other words, the total cost of ownership, EVs are more economical relative to ICE. According to the Natural Resources Defense Council: “Bottom line: You can bank on saving across the life of your electric vehicle.” According to Money Magazine: “Upfront costs may be higher for EVs, but these cars are also much cheaper to operate and maintain — and the savings can add up. Over the life of your car, you will often spend less by buying electric.”
  • EV prices will definitely come down going forward. The technology continues to advance across the board, but two reasons in particular are battery costs and scale.
    • Bloomberg New Energy Finance states, “BNEF expects average battery pack prices to drop again next year, reaching $133/kWh (in real 2023 dollars). Technological innovation and manufacturing improvement should drive further declines in battery pack prices in the coming years, to $113/kWh in 2025 and $80/kWh in 2030.” $100 per kWh is considered cost-parity with ICE.
    • Outside of Tesla, none of the manufacturers have thus far fully benefited from scale economics. That will change. These proposed regulations will accelerate that change.

Flexibility

Moving to EVs, let alone decarbonizing the economy overall, involves a complicated policy landscape at the federal, state, and even municipal level. Everyone recognizes this. In fact, in the FAQ document prepared by DEEP, it is stated,  “If we get to a point where it appears that the technology or the infrastructure deployment is such that we would not be able to meet the standards, the standards will change to help suit our needs. This has happened on several occasions in the past with the California standards.”

The vision of a hellscape where many cannot afford a car, and those that can will get stuck is simply not going to happen.

We would like to call out a very good myth vs reality opinion piece published in CT News Junkie, written by Rep. Christine Palm.

You Can Help

Without these regulations, we are back to a world where we really do have no plan, where we are back to passing non-binding resolutions that don’t deliver results.

You can help. Reach out to your legislator and tell them you support adoption of ACC II.

The big environmental advocacy groups, such as Save the Sound, CT League of Conservation Voters, and the Sierra Club are telling folks to reach out to Democrats since it is assumed there will be no Republican support and the Dems control the legislative agenda. We would encourage contacting your legislator regardless of party. CT participation in the original California standards had near-unanimous bipartisan support. There was some Republican support for these latest regs. It is unfortunate that clean vehicles and the environment have become part of the culture war.

Policy Matters

As a closing note, Bloomberg New Energy Finance reported this week that the Inflation Reduction Act is responsible for about $100 billion of newly announced investments in EV and battery plants. ACC II is complementary policy that will enable manufacturers to scale more quickly and for consumers to make use of the output of these new manufacturing facilities.

CT air quality is not in compliance with federal standards. Electrifying transportation is the easiest way for us to get there. If these regulations ultimately do not get enacted, the way forward will be harder, and in all likelihood, we will face a future remain out of compliance indefinitely.

 

 




Advanced Clean Cars II – Advocacy Alert

Advocacy Alert: Reach Out To The Legislators on the ACC II Legislative Review Committee

Contact information is provided at the end of this post.

What follows is a not so brief background that could easily be a lot longer. There is also be an upcoming webinar, produced by the Interreligious Eco-Justice Network. Scheduling and registration link here:

Clean Cars, Clean Trucks, and the Fight for Clean Air

Monday, October 30 – 7:00 pm – 8:30 pm

REGISTER HERE – https://cleancarscleantrucksandthefightforcleanair.eventbrite.com

ACC II Is Follow-on to California Emission Standards

When the federal Clean Air Act was passed in 1970, it recognized that California had already established its own regimen of emissions standards. California, particularly the Los Angeles area, had already been grappling with smog for a long time. And so California was given a waiver to continue to establish its own standards, which were more stringent than the federal standards. That is the overly-simplistic history of why there are two standards.

Many states, including Connecticut, have followed the California standard for tailpipe emissions, which became the de facto standard for manufacturers. It was easier for them to live with the more stringent standards than to have different vehicles for sale in different sets of states.

The acronyms that you hear around this are ACC (Advanced Clean Car) regulations and CARB (California Air Resources Board), the state agency that sets the California standards. The first set of ACC regulations addressed light-duty vehicles for model years 2015 – 2025. This follow-on set of regulations, known as Advanced Clean Cars Two or ACC II, begins with 2026, although the CT version would start a year later due to the current timing of enactment. The CT version is the CA version. The choice is binary: use the weaker federal standards or the more stringent CA option.

Why Do We Need This?

It’s obvious, right? Just look at the chart at the top (data from NASA, published by Axios). But, aside from global warming, there are local concerns.

  • Air quality in CT is terrible. The state receives failing grades from the American Lung Association and fails to meet federal air-quality standards.
  • The transportation sector accounts for about 38% of greenhouse gas emissions but also a significant amount of Nitrogen Oxides, a component of smog, and particulate matter. These contribute to cardio-pulmonary disease, cancer, low birth weight and birth defects.
  • ACC II applies to all vehicles, in other words, trucks as well as cars. The pollution profile varies for different classes of vehicles, but it’s all bad.
  • This is an important environmental justice measure. Pollution and its public health consequences fall disproportionately on disadvantaged communities.
  • The Department of Energy and Environmental Protection, DEEP, analyzed the impact of ACC II on CT and modeled enormous reductions in greenhouse gasses and pollutants as described in the table below.

Pollution Savings from ACC II

Health Benefits

According to the American Lung Association, CT can expect the following health-related benefits from cleaner air.

  • $11.5 billion in monetized health benefits
  • 1,060 premature deaths avoided
  • 22,900 asthma attacks avoided
  • 120,000 lost work days avoided

Wide Support

It may not come as a surprise that the EV Club supports this, along with other Connecticut EV Coalition members including Save the Sound, Acadia Center, and the Sierra Club, along with numerous other environmental organizations.

Charles Rothenberger, climate and energy attorney at Save the Sound and manager of the Connecticut EV Coalition, spoke at our September 9 Northeast Electric Vehicle Symposium (NEEVS) on this timely topic. “Two decades ago, Connecticut became a leader on cleaner transportation by adopting the Clean Cars I standards. Now it’s time to take the next step in achieving the kind of emissions reductions that the best available science tells us are essential for the health of people and the planet. Taken together, the regulations introduced today will provide long overdue updates to our vehicle standards, placing Connecticut on the path to transforming and modernizing the transportation sector and providing substantial environmental and health benefits for the citizens of Connecticut.”

The most controversial part of the regulations is the requirement that manufacturers no longer produce ICE vehicles as of 2035 (light-duty). Everything has to be a plug-in vehicle, though up to 20% of the plug-ins can be PHEV.

The automotive industry is lining up behind these regs. A number of manufacturers have already announced they are transitioning their fleets to electric roughly in this time frame. The Alliance for Automotive Innovation, a trade association for the legacy manufacturers, has endorsed it, as has the Truck and Engine Manufacturers Association.

The dealers seem to be taking a more neutral position. Their job is to sell what the manufacturers produce. However, the National Automobile Dealers Association states on its website: “Electric and hybrid vehicles are here, and America’s vast franchised dealer network is eager, excited, and essential to the successful deployment to the mass retail market. Dealers are all-in on EVs and are investing billions of dollars in their stores and staff to improve the purchasing experience and reduce barriers to electric-vehicle ownership.”

These regulations are needed to make a meaningful dent in our toxic, climate-warming emissions. The goals in the Paris Agreement of 2015 feel increasingly out of reach absent decisive action.

Its overarching goal is to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels” and pursue efforts “to limit the temperature increase to 1.5°C above pre-industrial levels.” To limit global warming to 1.5°C, greenhouse gas emissions must peak before 2025 at the latest and decline 43% by 2030.

ACC II provides a lengthy time horizon during which there is a gradual transition to zero-emission vehicles. Importantly, they provide a degree of certainty regarding marketplace conditions to the manufacturers, as well as manufacturer incentives for the building of affordably priced EVs.

ACC II Nearing the Finish Line, But a Potential Hurdle Remains

The CT Department of Energy and Environmental Protection (DEEP) received legislative authorization on a bipartisan basis to develop the rule making and conduct the required analysis. That part is finished. There has been a public comment period with a response from DEEP. The Office of the Attorney General has signed off on the regulations. The final step before going to the Governor is for the Legislative Regulation Review Committee to sign off on it. The committee is composed of 14 legislators with equal representation from both parties. The committee’s assignment is to review the regulations for adherence to legislative intent (which they clearly do). Now, some members of the committee are signaling that they may try to block the regulations and the Republican caucus is taking steps to make a public case. Here’s but one example.

If you clicked through to that article, you can see the FUDsters are out in force. And even though this originates with the Repubs, don’t make the mistake of thinking the Dems are immune to the pressure. We will be publishing additional content to address some of the questions being raised about the grid, the cost of EVs, and the economic impact. There’s a lot to shovel. The regulations require a minimum of a tie vote to be enacted.

Please Take Action to Let Regulation Review Committee Members Know Why ACC II Is Positive for Connecticut

We ask your help to support the passage of these regulations. Contact as many of the committee members as you can using their information is below, asking them to support ACCII. You are welcome to use the bullet points above as a guide to your messaging.

REGULATION REVIEW COMMITTEE MEMBERS:
 
Position     Chamber     Party         Name (Email) Towns Represented Website
Co-Chair     House       D Dathan, Lucy New Canaan, Norwalk http://www.housedems.ct.gov/dathan
Co-Chair Senate R Kissel, John A. East Granby, Ellington, Enfield, Granby, Somers, Suffield, Windsor, Windsor Locks http://www.ctsenaterepublicans.com/home-kissel
Ranking Member House R Carpino, Christie M. Cromwell, Portland http://www.cthousegop.com/Carpino/
Ranking Member Senate D Maroney, James J. Milford, Orange, West Haven, Woodbridge http://www.senatedems.ct.gov/maroney
Member House R Klarides-Ditria, Nicole Beacon Falls, Derby, Seymour http://www.cthousegop.com/Klarides-Ditria/
Member House D Arnone, Tom Enfield http://www.housedems.ct.gov/arnone
Member House D Godfrey, Bob Danbury http://www.housedems.ct.gov/Godfrey
Member Senate D Hartley, Joan V. Middlebury, Naugutuck, Waterbury http://www.senatedems.ct.gov/Hartley
Member Senate R Kelly, Kevin C. Monroe, Seymour, Shelton, Stratford http://www.ctsenaterepublicans.com/home-kelly
Member House R McGorty, Ben Shelton, Stratford, Trumbull http://www.cthousegop.com/McGorty/
Member Senate D Osten, Catherine A. Columbia, Franklin, Hebron, Lebanon, Ledyard, Lisbon, Marlborough, Montville, Norwich, Sprague (Baltic) http://www.senatedems.ct.gov/Osten
Member House D Ryan, Kevin Ledyard, Montville (Oakdale), Norwich http://www.housedems.ct.gov/Ryan
Member House R Fishbein, Craig C. Middlefield, Wallingford http://www.cthousegop.com/Fishbein/
Member Senate R Cicarella, Paul Durham, East Haven, North Branford, North Haven, Wallingford http://ctsenaterepublicans.com/home-cicarella



IRA EV Incentive Outlook For 2024

Post by Barry Kresch

Beware the Disappearing Incentives

There are 35 EVs (BEV and PHEV) listed as incentive-eligible by the Federal Department of Energy as of October 1, 2023. It is really fewer than that as the website breaks out the different trim levels. For example, there are 8 variations of the Volkswagen ID.4. The DoE website is here. It includes the ability to filter vehicles.

Tesla is publishing incentive alerts on its website, seen in the photo above, warning that some of its vehicles may lose full or partial incentive eligibility. Tesla is more public about it, but it is not alone in bumping up against the moving target of escalating in-sourcing requirements, the looming Foreign Entities of Concern rule, and ongoing IRS rule-making. From what we are hearing, most EV manufacturers could be affected, mostly because it is difficult to quit China as quickly as the legislation requires.

Battery Requirement Changes

These are the changes in the battery requirements that begin in January.

  • Critical Mineral Sourcing/Refining increases from 40% to 50%. This minimum percentage must come from either a domestic supplier or free trade partner.
  • Battery Assembly – the percentage of battery components that must be assembled in North America increases from 50% – 60%.

Foreign Entities of Concern

The rule that the manufacturers have voiced the most consternation about is the Foreign Entities of Concern (FEoC). This phases in beginning in 2024, followed by part two in 2025. The FEoC mirrors the battery regulations in that half of it applies to critical minerals and the other half to battery assembly. It is the latter half that starts in 2024 with the mineral portion following one year later.

Beginning in 2024, eligible vehicles cannot contain any battery components manufactured in a country so designated. The way to think about it is if you reference the 60% battery assembly requirement noted above, a manufacturer can source 40% of battery components from outside of North America in 2024. However, the FEoC rule specifies that none of that 40% can come from a FE0C. This is obviously about China, but other countries will fall into this designation.

We expect a number of vehicles to lose all or 50% incentive eligibility in 2024. Over time that will likely change, but the next two years are sure to be the most challenging as requirements tighten and new plants have not yet come online.

Ongoing IRS Rule-Making

A large rule-making task was quite literally dumped on the IRS in August of 2022. The wide-ranging IRA legislation, which encompasses much more than EVs, was passed in rather skeletal form, with the implementing agency, The Department of the Treasury, responsible for developing the specific rules. Sometimes this rule-making has run counter to the spirit of the legislation according to some of the legislators who voted for it. For example, the “leasing loophole,” which allows consumers to obtain incentives on vehicles that would otherwise not meet the requirements if purchased, came about because the IRS interpreted a lease as a commercial transaction. The vehicle is sold by the dealer or manufacturer to a captive finance company. This was defined as commercial. The fact that the finance company subsequently executes a lease with a consumer is beside the point from the perspective of the incentive. Commercial transactions fall under a different set of rules that do not include the restrictions that apply to consumer purchases.

Due to the short lead time, the ink has barely been dry on the rules at the time they are due to be implemented. Sometimes the IRS blows through the deadline. The first-year set of battery rules was postponed from January 1 to April 18th of this year for that reason.

The FEoC remains a moving target in this regard. The IRS has advised that the final list will be available before the end of the year, so potentially as little as 24 hours before it is due to go into effect. Maybe there will be an FEoC postponement, similar to what happened with the batteries.

How to Define FEoC

One of the big areas of contention involves not so much designating what countries fall under this rule, but how it is defined. For example, what if a Chinese company opens a plant in North America? What if it is a joint venture with a domestic manufacturer? What if a domestic company builds a factory but licenses technology from a Chinese company? The latter is the most minimalistic footprint and an example is the battery plant that Ford has begun building in Marshall, Michigan. The plant will be producing Lithium Iron Phosphate (LFP) batteries. Ford will own the factory. The workers will be Ford employees. The LFP battery chemistry IP is being licensed from CATL, the big Chinese battery company.

Last week, Ford announced it is pausing construction on this plant. Of course, the company is in the midst of contentious negotiations with the UAW, which is trying to include battery plants owned by the companies in which it has representation at parity wages. But Ford has also commented publicly that it is waiting for IRS determination regarding whether the IRA manufacturing and consumer tax credits are applicable to this plant. It has threatened to greatly downsize the plant if that is not the case.

VIN

While we hope that dealerships are able to offer consumers accurate information regarding whether an EV is incentive eligible, and in our experience Tesla has been pretty on top of incentives, the definitive way to know is to input a Vehicle Identification Number on this federal page. Of course, it would be better to know about eligibility further upstream, but that is what the government has provided.

Lobbying

There are lots of reports of furious lobbying behind the scenes, which occasionally spills into public view, such as the Ford battery plant. But there is more than that. Manufacturers would like to change the determination of vehicle eligibility from the “placed in service date” to the date of manufacture. They obviously have more control over the latter, and it buys them a bit of a grace period since it is earlier.

It has also been reported that manufacturers would like to get Vietnam designated as a free-trade partner for the purposes of battery critical minerals.

The Transfer Provision – Another Big Deal

Tax credits are not the most consumer-friendly form of incentive. You have to wait for it. And not everyone has enough tax liability to be able to use it. The transfer provision is the legislation’s way of turning the tax credit into a rebate. The buyer transfers the credit to the seller. The seller takes the credit and gets reimbursed by Treasury. Also, non-taxable entities can use the transfer provision.

My biggest concern is that the process won’t work smoothly when it is initially introduced. The IRS has been working on the process. It is yet another aspect of rule-making that will likely come down to the wire. Will the dealers and manufacturers be on top of it and not afraid to use it?




Northeast Electric Vehicle Symposium Recap

Photo at top taken under one of the solar canopies at the Hotel Marcel with the building in the background, from left to right: Daphne Dixon – Live Green CT, Paul Wessel – Greater New Haven Clean Cities, and Analiese Mione, Barry Kresch, Bruce Becker, and Paul Braren from the EV Club who organized the symposium.

“Sold-out” Conference

Well, it was free, but there was more interest than we were able to accommodate and we had to close registration. Early feedback has been extremely positive. such as this message:

“I attended the NEEVS yesterday and had a fantastic time. What a great lineup of speakers/presentations and lots of fun at the car show as well! I’m looking forward to future symposiums in the coming years. …. Again, I had a great time at the symposium (and the lunch was incredible).”

We would like to thank our sponsors: Live Green CT, Greater New Haven Clean Cities Coalition, EVConnect, Maxwell Vehicles, and ChargePoint, without whom we would have been munching on stale pretzels.

Of course, we also thank our attendees for joining us and being an engaged and interactive audience.

The Hotel Marcel provided excellent, eco-friendly hospitality. For anyone who may be nervous about switching from a gas to an induction cooktop, the quality of the food attested to how good induction cooking can be. Even the chafing dishes were induction.

We’ve had some comments about how a small committee was able to put together a jam-packed agenda in a short period of time. If anything, the challenge is less about finding content than winnowing it down to fit within our time parameters. As it was, our 3-hour speaker agenda took 4 hours with too little time for Q&A.

We want to give a shout-out to Rich Jordan, president of the CT Tesla Owners Club, for his help with the car show, to the Westport Police Department and their Model Y patrol car, and to Tesla for bringing vehicles for test drives.

Converted EV Van

Maxwell Electric Shuttle at Hotel MarcelHotel Marcel architect and developer, Bruce Becker, talked about how Maxwell Vehicles converted an ICE van to electric, using a salvaged Model 3 battery and drive train. This van gets a lot of use shuttling guests to downtown New Haven, Yale, Union Station, Tweed Airport, and other destinations.

 

 

 

 

Out of Spec Dave

YouTube and X (Twitter) personality, Out of Spec Dave from Norwalk, CT, talked about his adventures as a road warrior, having driven lots of different EVs and experienced the many faces of public charging. Not all of them are happy faces. Part of the charging experience is knowing before you get to a charger, when deciding where to charge, whether a charger is in service and how fast it is charging. There is a gap in the eco-system here. He has launched the “Rate Your Charge” newsletter. Take a video or photo of your charge, describe your experience, and tag @outofspecdave on Twitter. The data are compiled and this weekly report is issued. Take a video or photo, provide details and tag them (@outofspecdave) on Twitter. These are being compiled in a weekly report posted to Twitter. For those not on Twitter, use this Google Doc: https://docs.google.com/forms/d/e/1FAIpQLSd9nE1JOulqidJNacpL230TdswfnnaWBTjdGIaky3ffkHF6EA/viewform?pli=1

Rate Your Charge - Out of Spec Dave

PACE

Mark Scully from People’s Action for Clean Energy (PACE) spoke about their program to help municipalities decarbonize and save money in the process. This slide illustrates the cost savings projected in a transition to renewables.

Cost Savings with Renewable Energy

United Illuminating

We get many questions regarding whether widespread EV adoption will crash the grid. While the grid does need to be modernized (and the Public Utilities Regulatory Authority has a grid modernization docket), Rick Rosa from Avangrid/UI discussed using EVs to optimize the grid. This slide is an example of optimization vs curtailment. EVs will be beneficial to the grid for the foreseeable future and, as such, there are incentives for EV owners to participate. See our incentives page for a more detailed description of the program with links to sign up for the residential or commercial incentives. This program is also offered by Eversource and it can offset the costs of buying and installing a 240 volt charger, as well as pay an ongoing incentive to participate in their managed charging programs.

Charging Curtailment with Optimization

Zoning for EV Readiness

Daphne Dixon of Live Green CT, who has done a lot of work with municipalities, gave a presentation that illustrated the complexity of zoning for EVs but also highlighted the significant benefits as noted in the example below.

EV Zoning Opportunities

All Electric, Zero Emission Home

Paul's Home with Tesla Roof

Paul Braren provided a detailed description of his journey to create an all-electric home (solar roof seen in the photo, powerwall/VPP, 2 EVs, insulation for home and windows, heat pumps, smart panel, electric garden tools) and capture the available incentives. It has been a complicated road. This links to his full presentation.

IRA Transfer Provision

In his update on incentives, EV Club President, Barry Kresch, discussed the implementation of the transfer provision in 2024, and how it changes a tax credit into a point of sale rebate.

IRA Transfer Provision

Advanced Clean Cars II

CT is a participant in the California Air Resources Board emissions requirements. It is now in the process of implementing the second phase of these regulations, commencing in 2027 through 2035. The rules require manufacturers to sell increasing amounts of zero emission light-duty vehicles, reaching 100% in 2035.  There is a separate set of regulations that would significantly lower emissions for medium and heavy-duty vehicles during this same period. Charles Rothenberger, Climate Attorney for Save the Sound, explained these regulations. The legislature has authorized CT DEEP to proceed with the required multi-step process. The slide below shows where we are and the remaining steps.

steps to implement advanced clean cars 2

There is some concern that when the rules go back to the legislature, in which a bi-partisan review committee is supposed to examine them for legal sufficiency, that there may be an effort by opponents to short-circuit the approvals process. More on that to come.

We hope you see you next time!!!

 




Northeast Electric Vehicle Symposium (NEEVS)

The Symposium is Sold Out – People Can Still Come for the Car Show

Get charged up at NEEVS, the ultimate gathering for EV enthusiasts, policy wonks, and all who seek cutting edge guidance on decarbonization.

Please join us at the first annual Northeast Electric Vehicle Symposium (NEEVS) at Hotel Marcel in New Haven on September 9, 2023. EV enthusiasts, electrification and decarbonization advocates, sustainability volunteers and professionals, municipal employees, real estate owners and developers and policy wonks are invited to join us.

Bruce Becker is the lead architect and owner/developer of Hotel Marcel in New Haven, the country’s first zero emissions and Passive House hotel, and Chairman of the EV Club of CT. Bruce will welcome guests as they enjoy a light buffet lunch, and briefly share his approach to hotel e-mobility at Hotel Marcel. Guests have access to Tesla Superchargers, Level 2 chargers under a solar canopy and a custom electric shuttle van.

Hotel Marcel New Haven with solar canopies in foreground

You will learn firsthand from expert guest speakers about:

  1. Hotel Marcel’s guest experience in e-mobility,
  2. The state of public EV charging and opportunities for improving it,
  3. The latest updates in state and federal EV/EVSE incentives and V2G,
  4. Best practices for transitioning vehicles and homes to all-electric,
  5. How to move municipalities to 100% clean, renewable energy,
  6. The societal and environmental benefits that proposed regulations for light, medium and heavy-duty vehicles under Advanced Clean Cars II (ACC II) provide for Connecticut.
  7. Zoning for EV readiness

Date: September 9, 2023

Hours: 12:00-4:30

Buffet Lunch: 12:00
Presentations: 12:00-3:00
Networking and Car Show 3:00-4:30

Host: Hotel Marcel, 500 Sargent Drive, New Haven, CT 06511

Organizer: EV Club of CT

Partner: Tesla Owners Club of CT

Thank You to Our Generous Sponsors: Hotel Marcel, Live Green CT, EV Connect, Chargepoint, Maxwell Vehicles, and the Greater New Haven Clean Cities Coalition.

Live Green Connecticut

 

EV Connect is a sponsor of NEEVS.

Chargepoint

Greater New Haven Clean Cities Logo

Maxwell vehicles logo

Hotel Marcel New Haven at dusk

Speaker Schedule:

12:00-12:15: Welcome address from Bruce Becker, lead architect and owner/developer of Hotel Marcel New Haven and Chairman of the EV Club of CT. Guests will be treated to an overview of the e-mobility customer experience at Hotel Marcel, the country’s first zero emissions and Passive House hotel.

12:15-12:45: Out of Spec Dave will share his experiences charging his EVs at various public charging stations, sometimes across long distances, to map the current state of publicly-available EVSE and how the customer experience can be improved to accelerate EV adoption.

12:45-1:15 Mark Scully, President, People’s Action for Clean Energy (PACE) will present their model for decarbonizing at the municipal level. PACE is an all-volunteer public health and environmental organization formed in 1973 by a group of concerned Connecticut citizens to promote the development of clean energy, encourage energy efficiency and conservation and challenge Connecticut’s commitment to nuclear power. Over many years, PACE has engaged in education, outreach and advocacy on clean energy issues. PACE is committed to developing a pathway to a 100% renewable future, free of fossil and nuclear fuels. PACE is the largest all-volunteer organization in CT working on these issues, and is a non-profit 501(c)(3) organization.

1:15-2:05: Vehicle and home electrification panel discussion + Q&A with moderator Barry Kresch, President, EV Club of CT, and panelists Paul Braren, owner of TinkerTry and an all-electric home, and Rick Rosa, Senior Manager for EV Programs and Products from Avangrid/United Illuminating. Decarbonizing vehicles and the built environment requires working with a suite of incentives, electric utility programs, and equipment vendors. Learn about the latest EV/EVSE incentives and how the EDCs (utilities) are thinking about Vehicle to Grid (V2G) connectivity. Paul will share best practices and lessons learned from going all-in on his home remodeling by enrolling his Tesla Solar Roof and Powerwalls in Tesla’s Virtual Power Plant (VPP) with ConnectedSolutions program, powering two EVs utilizing Managed Charging and Charge on Solar, maximizing efficiency and savings by installing a SPAN smart electrical panel and installing heat pumps for year-round comfort with no natural gas.

2:05-2:30: Charles Rothenberger, Climate & Energy Attorney, Save the Sound will present highlights of the Regulations for Light, Medium and Heavy-Duty Vehicles under Advanced Clean Cars II (ACC II). In July 2023, Connecticut became the latest state to initiate adoption of the Advanced Clean Cars II rule, which will benefit society by requiring manufacturers to increase sales of electric and other zero-emission models within the state over time, culminating with 100% of new sales being ZEV in 2035.

2:30 – 3:00: Daphne Dixon, Co-founder and Executive Director, Live Green Connecticut and Director, Connecticut SWA Clean Cities Coalition, will present about Zoning for EV Readiness, a must attend for municipal decision makers.

Hotel Marcel bar and dining room
Hotel Marcel bar and dining room

Networking and Car Show 3:00-4:30: Enjoy beverages and food at the hotel bar while networking with other guests, and head outdoors to the lot adjacent to Hotel Marcel’s Superchargers to enjoy the car show while networking with EV owners that are members of Tesla Owners Club of CT, the EV Club of CT and the Westport Police Department.

Hotel Martel New Haven Superchargers with Teslas
Hotel Marcel New Haven Superchargers with Teslas

RSVP required: Register here.
Interested in a sponsorship? Please email evclubct@gmail.com.

Parking at the hotel is available to all. Club members that are participating in the car show, please register your vehicles for that portion of the event.

Guests may register for:

1) both event tickets: the symposium and car show (only if you’re showing a car),

2) only the symposium (attending the car show is open to all registered symposium guests)

3) only the car show (if you’re showing a car and will not be attending the symposium).




CHEAPR – New Program Components Beginning to Be Implemented

The following is a summary of what was reported in the recent CHEAPR board meeting.

Pre-Qualification Voucher Program for Income Limited Persons

This new program soft-launched on March 29th.

There have been supplemental rebates for income-limited buyers (often short-handed as LMI) for new EV purchases, as well as rebates for used EV purchases for several years. These have gotten almost no traction. From the beginning, concerns were expressed that the criteria (participation in certain government assistance programs) were too restrictive and the post-purchase application process, whereby the purchaser had to float the cash for the incentive (as well as live in some suspense that it would come through), were just not realistic.

Those complaints, along with the empirical data, led the legislature to direct changes to the program that became law in Public Act 22-25, passed in 2022. In addition to the government assistance program participation, an income option was added, specifically that households with income of up to 3 times the federal poverty rate would be eligible regardless of program participation. Some examples of 3x poverty: $43,470 for a single person household and $90,000 for a 4-person household.

DEEP reports this has led to an encouraging early response. This is based on vouchers awarded. It doesn’t definitively mean that everyone who received a voucher has used it. That was a subject of discussion when the LMI program was first implemented. Apparently, some other states that had used vouchers had seen low conversion rates, and there was concern about how wasteful the extra admin overhead would be. As of this writing, DEEP has only updated published rebate data through April 13th, and there are no recorded LMI rebates between the end of March and April 13th, so it is too soon to have any visibility.

The next step is for there to be a marketing push. A vendor has been selected and we’ll see how fast the information gets out.

Used EV Rebate

As noted above, the LMI program includes rebates for used EVs. The CHEAPR website indicates which EVs are eligible, just as it does for new EVs. Only vehicles that previously met the criteria for eligibility when new will be eligible as a used vehicle. We thought there might be a willingness to loosen this and it is disappointing this is not the case. We think it needlessly limits the options for the consumer. There is already a gating requirement in terms of income limits. This feels needlessly restrictive.

There are some details that we await. The MSRP cap was lowered, then raised over the course of the program. Is the eligibility based on the current cap or the cap in effect at the time? What if a model has had price changes?

Fleet Incentive Program

A major addition to the program was extending the CHEAPR incentives to fleets. This applies to private fleets, municipalities, non-profits, and tribal entities. Non-profits must provide a Certificate of Legal Existence to prove good standing. According to DEEP, the launch will occur sometime in the third quarter.

The cap is 10 rebates per year and 20 lifetime. The DEEP commissioner has some flexibility to raise the cap for an organization if it is determined to be warranted.

The fleet program applies to new vehicles and the standard rebate only. The MSRP cap of $50K applies here as it does with the consumer.

E-Bike Rebate

The first phase of the e-bike program is scheduled to launch on June 28th with a point of sale voucher for brick and mortar stores. Online sales will come along later. CT residents age 18 or older can apply for a voucher that can be redeemed for an eligible e-bike at a participating retailer. Check with your preferred e-bike retailer to see if they are enrolled in the program.

The base rebate is $500. That can be augmented by an additional $1000 for LMI individuals.

There is an MSRP cap of $3000.

Eligible bikes must have either a UL 2849 or EN 15194 certification. (A pending certification does not count.) This is an important requirement to ensure safe e-bikes are purchased. Generally speaking, and unlike with automobiles, there is a paucity of regulation at this time. There is a lack of awareness that there are unsafe e-bikes out there, and with lithium-ion batteries, you are literally playing with fire.

Update: According to Bloomberg, the program was fully subscribed within 3 days of launch.




Delaware Gets Direct Sales; Not So Connecticut

Post by Barry Kresch

The Direct Sales Morgue is Enlarged By One More Year as Bill Dies in Committee

As the legislative session inches towards its conclusion on June 7th, we have been through another year without enactment of legislation that would permit electric vehicle manufacturers using a direct sales business model to open stores in CT. These bills would permit manufacturers of exclusively battery electric vehicles (BEVs) that do not have an established dealership network (and are not majority owned by a company that does) to open company stores to sell and deliver directly to CT customers. These are companies such as Tesla, Rivian, and Lucid, with others on the horizon.

The proposed legislation would not affect the arrangements that existing dealerships have with their affiliated manufacturers. Governing the dealer/manufacturer relationship was the intent of the laws when they were passed long ago. All these dealer claims about how the franchise laws protect consumers is just smoke.

CT Insider, reporting on the current legislative session, quotes Transportation Committee Co-Chair, Sen. Christine Cohen characterizing the bill as “controversial,” that it would take up a lot of committee and floor time, and lack the votes to pass.

To quote former State Senator Will Haskell (D-Westport) when he previously raised direct sales, this bill is only controversial in Hartford. The way the bill was killed this year is the way it is always defeated – without being called for a vote. The legislators well know that their constituents support this bill. Many legislators are afraid to cross the dealerships, an entrenched and well-funded special interest. By working behind the scenes to prevent the bill from being called, they can have it both ways. They keep the dealers happy and they don’t have to go on the record opposing their voters, not to mention ding their environmental scorecard. (The CT League of Conservation Voters, the organization that publishes the scorecard, views direct sales a pro-environment measure, but the scorecard can only count votes that are cast.)

This blog wagers that a number of these behind-the-scenes “no” votes would turn to “yes” votes if taken publicly.

The CT Insider reporting also quoted Cohen as citing the actions of Tesla CEO, Elon Musk, as being a factor costing support. It is fair to acknowledge this. He is not helping matters. Direct sales used to be referred to as the “Tesla Bill,” but there are now other companies using this model. This blog sees this as a larger issue of consumer choice, EV adoption, and economics. It is the single most effective thing that can be done to accelerate EV sales.

Dealerships at times object even to their own affiliated manufacturers’ efforts to sell more EVs. For example, Ford’s new Model-e program that seeks to more aggressively position dealerships to sell EVs is moving forward, but it has engendered resistance and dealership lawsuits. The CT dealership trade association enlisted several CT federal and state elected officials to speak out publicly against the Ford plan.

Some legislators do openly support direct sales. Included among them is Rep. Keith Denning (D-Wilton), who submitted a direct sales bill this year, which was not raised by the Transportation Committee Chairs. This blog reached out to him and he provided this statement:

“My name is Keith Denning and as a freshman legislator I raised a bill in the Connecticut Legislature for direct sales of electric vehicles to the citizens of Connecticut. While the bill was not raised in committee, I still support the ability of car manufacturers to sell their product directly to the public. 
With the revolution of transportation into electric vehicles that we are currently experiencing, the sales of cars directly allows new companies coming into the market to keep their costs down by not having dealerships and can give lower pricing to the consumer.
I am not asking for current dealerships to close, but allowing for a new way for cars to be sold. This builds our economy, allows for small new manufactures to enter the market and makes Connecticut a leader in the transition to the new electric car economy.”

Delaware State Court Rules Direct Sales Does Not Violate Franchise Law

A nearby state, Delaware, now has direct sales. This came via the judiciary. A recent ruling from the Delaware Supreme Court held that the language in the franchise law applies only to existing manufacturer-dealer relationships and is not applicable to new companies that operate sans dealerships. Tesla filed the lawsuit.

For this to have a chance to happen in CT, Tesla or another manufacturer would have to file a lawsuit in state court. They are a legitimately injured party and would have the standing to proceed. The unsuccessful efforts to date in CT to legalize direct sales have only gone through the legislature. One potential downside is that if such an action were to be filed, the legislature would likely punt on dealing with it (which is basically what they’ve been doing anyway) until the process plays out. That could take some time. The Delaware case was appealed before it was taken up by the Supreme Court.

Massachusetts is another state in the region where direct sales came about via a lawsuit. However, if there is one takeaway from the Delaware ruling, it is that franchise laws are not uniform across states. The language of the CT law would have to separately be tested.

Consumers Support Direct Sales

The option of buying a vehicle via direct sales is overwhelmingly favored by consumers. When last the issue was polled in CT, 83% were in favor. Support cut across age, party affiliation and ethnicity. (The polling was fielded by public-opinion firm, GQR, with a sample of 500 likely voters and had a margin of error of +/- 4.4% at a 95% confidence interval. More detail is in the linked page.)

Poll Shows 83% of CT residents support EV direct sales

Broad Support for EV direct sales across all demographic groups

Testimonial Unanimity – When there was open testimony in 2021, 81 written testimonies were submitted to the Transportation Committee. If one excludes the 9 from individuals associated with the dealerships and the 3 from Tesla, Rivian, and Lucid, we are left with 69 from members of the public at large. All 69 of them were in favor of direct sales.

When Sen. Cohen remarks that the bill takes a lot of floor time (i.e. inconveniencing the legislators), the reason is that many people register to offer oral testimony. Public hearings package multiple bills into a day of hearings. When direct sales is on the agenda, it becomes a very long day indeed. In past hearings, some legislators have looked visibly annoyed, and some of them verbalized it, that they have to sit through more hearings about direct sales, where everyone but the dealers are in favor. Legislators, generally speaking, exhort the public to get involved. In this case they do, and ironically, it’s a problem for them. This was mitigated in a narrow sense in the short session of 2022, where by prearrangement, only a small number of people were permitted to testify.

Dealerships Now Seek To Block Service Centers

A more recent insidious development is that dealerships have mobilized to block direct sales manufacturers from opening service centers. They want to make getting the vehicles serviced as inconvenient as it is to buy them.

Hoffman Auto sued East Hartford when they granted a permit to Tesla to open a badly needed second service center to complement the existing one in Milford. East Hartford subsequently withdrew the permit and Tesla did not further pursue it. Dealer representatives showed up in force for a hearing in South Windsor regarding a proposed Tesla service center. More recently, Mario D’Addario Buick and TD Properties sued Shelton and Rivian after the Town granted Rivian a permit to build a service center. Rivian’s motion to dismiss is awaiting a ruling. The dealers latch on to anything they can to throw up roadblocks for these companies.

That New Tesla Service Center – It’s In Massachusetts

Tesla is building a new sales and service center in Chicopee, MA. The company was granted an approval by the Chicopee City Council on May 3rd. Chicopee is only about 10 miles north of the CT border off I-91. This location will be more convenient for customers in Hartford and points north than Milford. That sound you hear is those jobs and taxes going to MA. This will take some of the pressure off getting a Tesla serviced locally. It doesn’t change the fact that CT Tesla purchase customers have to pick up their vehicles in Mt. Kisco, NY.

Direct Sales = Greater EV Adoption

Every year there has been testimony before the legislature, the dealer representatives talk about how all-in they are for electric vehicles. Then every year, they keep not selling them, or not that many of them. When we look at the data, we see only modest growth.

Tesla has testified that an ideal scenario in its view is that Tesla becomes a smaller slice of a rapidly growing pie. That hasn’t happened. In fact, the Tesla share of registered EVs is higher now than when we began tracking it in 2017.

New Sierra Club Study

The Sierra Club recently released the third wave of its ongoing EV Shopper Study with fieldwork conducted in 2022. These studies have been fielded in 3-year intervals. Consumers visit or call dealerships to ask about EVs, see if the salespeople are able to answer basic questions, find out whether there is a charged vehicle available for a test-drive, etc. The findings of the new study are as disheartening as those of past studies.

  • 66% of car dealerships did not have a single EV for sale. Keep in mind, this includes both new and used vehicles.
  • To some degree, supply-chain issues persisted into 2022, but of the 66% of dealerships without EVs, 45% of them said they had no interest in selling EVs.

These numbers are exclusive of companies such as Tesla, Rivian, and Lucid that do not have dealerships, and which obviously want to sell EVs. Also, they are national numbers. The Sierra Club does break the numbers down by region, but the numbers in the Northeast were not that different from the overall profile.

Some dealers make an effort, but we are still a long way from where most or all dealers act like they actually want to sell EVs. This is consistent with what we have been seeing in our ongoing analyses of CT CHEAPR rebate data.

Atlas Public Policy – Direct Sales Would Remove an Estimated 42 Million Metric Tonnes of CO2

Atlas Public Policy builds analytical tools to help policy makers and businesses make decisions. Atlas, in conjunction with the Electrification Coalition, undertook an analysis to assess whether a state’s adoption of direct sales accelerates EV adoption. Their findings were that, indeed, it does. From the report:

  • Consumers have reported poor EV buying experiences at dealerships,
  • Dealers are incentivized to sell internal combustion engine vehicles rather than EVs due to the dealership revenue associated with future servicing needs,
  • Dealer franchise laws add costs for consumers, and
  • Giving consumers the freedom to buy via direct-to-consumer models leaves both consumers and manufacturers better off.

The report goes on to forecast what the emissions impact would be if direct sales were to be adopted country-wide. Because it is a forecast, it presents its findings as a range. The midpoint of the range would result in the removal of 42 million metric tonnes of CO2 in the period of 2023-2030.

Bloomberg Analysis

Bloomberg published an opinion piece entitled, “Car Dealership Laws Aren’t Fit for the Electric Age,” in which they looked at EV adoption in open vs. closed states. (The article is behind a paywall.) The results were quite striking with over 3X the EV adoption rates in states with uncapped direct sales, compared to those prohibiting the practice.

The legacy Automotive Industry Is Often Its Own Worst Enemy

One could be forgiven for thinking that the strategy of many of the established automotive companies has been denial.

Ford is a notable exception. They made the Model-e gambit, followed last week by the hugely consequential announcement that the company has negotiated an arrangement with Tesla to give Ford owners access to the Tesla Supercharger network, and that beginning in 2025, Ford vehicles will be manufactured with native Tesla-compatible connectors. In our view, the Supercharger arrangement is a smart move for both companies. It potentially could influence other companies to follow suit. (We understand that existing Ford EV owners will be able to get adapters. We would be interested in hearing from Ford owners who are readers of this blog about how and what Ford is communicating. Please leave a comment.)

CCS stands for Combined Charging Standard and NACS stands for North American Charging Standard. CCS is backed by most manufacturers. Where it says “Tesla” below, it is the NACS connector, which is the standard Tesla uses and has been pushing to be the universal connector, without much success until now. You be the judge of which is the more elegant design. Between Tesla and Ford (and, I suppose, I shouldn’t overlook Aptera; though they haven’t delivered any vehicles yet, they still get points), the majority of EVs on the road will have NACS.

NACS vs CCS connectors

Not all companies are moving aggressively like Ford. Stellantis is a major manufacturer, the owner of Jeep, Chrysler, Dodge, Ram, Alfa Romeo, Fiat, Maserati, and several others. And yet if we look at their profile in CT, they are nearly invisible. They have a modestly successful Jeep Wrangler PHEV and that is about it. (Stellantis represents 1553 of 30,017 EVs registered in CT as of Jan 1 – 1,200 from Jeep, 317 from Chrysler, 36 from Fiat. Only the Fiat are fully electric – BEV and they are not currently being manufactured.) Now, as they play catch-up – they announced a new EV platform – they are laying off thousands. From Yahoo Finance: “The company has about 56,000 workers in the U.S., and about 33,000 of them could get the (buyout) offers.”

Larger Environment

While we’re fighting over the right to buy an EV directly from the manufacturer, China is banning the sale of ICE vehicles that don’t meet its new, stringent emission standard (VI B) by July 1. That could send shock waves across the world as inventories of unsellable ICE vehicles grow. We are seeing states ban the sales of new ICE vehicles as of around 2035.

Closing Thoughts

How dealerships and the legacy automobile industry writ large will ultimately fare is up to them. If they innovate and compete, they’ll be fine. Some of them have embraced EVs, but judging by the data, not nearly enough. In CT, the dealership special interests have thus far been given the message that they can sit back and not worry about it, that change can happen on their timetable, negative consequences for those of us who live in the state be damned.

There are many EV Club members who own or have ordered a Tesla, Rivian or Lucid. For those of us who have made the trek to Mt. Kisco to pick up a Tesla, it stares us in the face that the jobs to build, staff, and maintain the facility are in New York, and the company pays property taxes to Mt. Kisco and a franchise registration fee to NY. Manufacturers selling directly, a large and fast growing industry, are not choosing CT to set up manufacturing facilities, despite our ports, roadways, railways, and highly educated and trained workforce. We lose twice.

Today’s headlines and accompanying disruptions in the oil and gas market punctuate the urgency of moving away from fossil fuels. Allowing direct sales will help CT meet its EV adoption objectives, create green jobs, reduce pollution, and, most importantly, it is what is right for the citizens of CT.

How Can You Help

We agree with Rep. Denning that a direct sales law is not anti-dealer; it is pro-consumer and pro-CT.

We have to ask ourselves why we’re okay with making it harder for CT residents to buy an EV, not easier. Why are legislators ignoring the will of the people and bowing to the dealerships?

Our EV Club is not a political organization (501(c)4). We do not have paid lobbyists prowling the Capitol. We can only operate as a grassroots organization evangelizing for EV adoption, promoting free competition, and being open to new and innovative ways of doing business.

You can be sure that legislators hear from the dealerships and their lobbyists whenever there is a bill. They have to hear from as many of us as possible. Even if you have emailed or called previously, every year is a new game.

The 2024 legislative session will be a short session, which happens in election years. The rules are more restrictive and there may well not be a direct sales bill introduced. But as we get into election season, that will be a good time to make your voice heard.




What The Consumer Needs To Know About The New Battery Rules

Photo above: Ford expects its Mustang Mach-E to qualify for half the incentive; Chevy expects the same for its Bolt.

Battery Rules Issued

January 1 came and went. The new federal incentives in the Inflation Reduction Act became law but the implementing agency, the IRS, had not completed rule-making for several portions of it, most particularly how manufacturers can be in compliance with the new rules for sourcing and refining of critical minerals and battery assembly. The IRS said it needed until March. True to its word, the rules were issued on March 31 and take effect April 18th. This interim period allows manufacturers to determine which vehicles will be eligible and whether the certification will be for the full $7500 credit or only half.

Consumers have gotten a benefit from this delay as more vehicles were temporarily eligible. Many vehicles are expected to lose incentives due the rules. If you have cash burning a hole in your pocket and are in the market, you can still move fast and pick up an EV with the full incentive applied (assuming the other criteria are met). But you have to take possession of it before April 18th. The incentives are applied, in IRS speak, at the “date placed in service.”

What Rules Apply

The rule-making itself is highly technical in nature. The law requires that 40% of the sourcing and refining of critical battery minerals occur either domestically or with a free-trade partner and that 50% of battery assembly takes place in North America during 2023. Going forward, these levels escalate. So, how do you define 40%/50%? The IRS has determined that it is to be based on value. So how does one define value? What is the legal definition of a free-trade partner? (The ink is still wet on some frantic dealmaking that happened so that some friendly nations, e.g. Japan and South Korea, could officially become free trade partners.)

We’ll know on April 17th what vehicles are eligible for how much of the incentive, but it will be a continually evolving list as manufacturers wrangle supply chain logistics and as the requirements escalate. It is possible that a vehicle eligible in one year loses eligibility in a subsequent year if the supply chain has not maintained pace with the requirements. And it has to be done in an environment of (presumably) a rapid ramping up of production volume. This article from Reuters includes statements by some manufacturers regarding which vehicles stand to lose incentives. This is the Department of Energy page that lists qualifying vehicles. It will be updated on April 17th.

Making Sure the Vehicle is Incentive-Eligible

It certainly helps if a manufacturer certifies that a given vehicle is incentive-eligible. But the IRS is officially determining eligibility based on the VIN. This is a new world we’re about to enter, and with all that is being written in the press about how these incentives work, there hasn’t been much discussion of this potential for a consumer to be left in the lurch.

It is possible that two of the same make/model/model year vehicles have different incentive statuses, based on when and where the manufacturing and delivery take place. When filing for the tax credit, the VIN is required and Treasury matches it to its records. It is advisable to check the VIN before buying the vehicle. That can be a hassle, as for a made to order vehicle, the VIN isn’t available until late in the game.

The EV Club, in partnership with the Electric Vehicle Association, recommended that the IRS use make/model/model year and deal with it at the manufacturer level. Our take is that asking consumers to be in the VIN checking business is a clunky way to go. It could cause an unpleasant surprise. It definitely fosters confusion.

For readers of this blog, if you buy an EV after the new rules are in effect, we are interested in hearing about the process and if you felt protected if you were promised an incentive.

Leasing

For those who lease, none of the rules apply, not even North American final assembly. The full incentive applies. Just remember, the finance company gets the incentive. It is up to the consumer to verify it is being passed along, which is not legally required. It is called a subvented lease.

Other Rule-making

Yes, there’s more, particularly the foreign entities of concern rule and the transfer.

Foreign Entities of Concern

The foreign entities of concern rule, which will phase in during 2024 and 2025, will likely include several countries, but is really all about China, which currently dominates the battery mineral supply-chain and has a lot of battery IP. What about Chinese investments in this country? Ford recently announced a joint venture with the big Chinese battery company, CATL, to build a plant in Michigan to manufacture LFP (Lithium Iron Phosphate) batteries. Does this comport with the law? In this case, Ford is banking on the fact that it is only the IP that comes from CATL and that the plant is owned by Ford. This is an article in Politico that discusses it in some detail but stops short of making a definitive statement. Stay tuned.

Transfer Provision

The transfer provision kicks in as of Jan 1, 2024. This year, the incentive is a tax credit. There are two drawbacks to tax credits. The first is that you have to wait until you file your taxes to get the incentive. The other is that you need to have the tax liability to burn it off. The transfer provision allows the consumer to transfer the incentive to the dealer or manufacturer and take the credit as a “cash on the hood” rebate. Unlike with a lease, the law requires the dealer to transfer the full amount of the credit to the consumer. That solves the timing problem. But what about if the consumer doesn’t have $7500 of tax liability? Could there be a claw-back? That seems unlikely. The intent of the transfer provision is, in part, to be an equity measure, so people without tax liability could take advantage of the incentive.