Volvo Is First Manufacturer to Bypass Dealers for EV Sales

When we blogged about the EV Freedom Bill, SB 127, a short while back, one of the facts that we unearthed was that in Germany, Volkswagen had basically given up on its dealerships to sell EVs. It began selling them corporately, using the dealerships as agents. And their strategy worked! The company had a successful introduction of its ID.3 last fall and saw it become a top-selling BEV in Europe. (This car is not being brought to the USA. VW is now taking orders for its larger sibling, the ID.4 in this country.)

It was an interesting development, but it didn’t necessarily mean that we would see the same thing happen here given franchise laws that are generally more restrictive than in Germany, where manufacturers are allowed to own stores. Well, not so fast. The New York Times reported a story about Volvo announcing a transition to an all BEV lineup by 2030, 5 years sooner than what was viewed as an aggressive announcement by General Motors.

If you stay with the article as far as the 13th paragraph, this little tidbit is reported:

“In another break from the practice of traditional carmakers, Volvo’s electric models will be sold exclusively online.”

Volvo is implementing a no-haggle sales policy. Like Tesla. Dealers are being used only for test drives and delivery. In other words, the dealer becomes an agent. Exactly what VW is doing in Germany.

This was punctuated by a club member who lives in Fairfield County and had made an inquiry about the XC40 Recharge a while back. He was invited to an up-close and personal encounter with the car – in New York City. (There is no shortage of Volvo dealers locally.) Here is the invitation:

We presume this is a temporary strategy to prepare for the transition to all-electric. Or perhaps a hybrid strategy like Volvo’s corporate sibling Polestar, which has only 3 dealerships in the country. If it isn’t, then there will be no Volvo dealers and Volvo will have to shake hands with Tesla. Nonetheless, it is a dramatic announcement, and we wonder if this will result in legal wrangling. On the other hand, maybe they’re glad not to have to sell an EV.

Direct Sales of Electric Vehicles (EVs) Should Be Permitted in CT

Post by Barry Kresch

Governor Lamont has signed onto the Transportation Climate Initiative (TCI), a regional cap and invest plan. At the same time, the state is falling behind the goals set forth in the Multi-State Zero Emission Vehicle Action Plan. The time has come to permit direct sales of EVs in CT.

Consumers deserve to come first and should be able to freely choose EVs that fit their lifestyles, needs, and budgets to accelerate the adoption of electric vehicles and more rapidly transition to a zero-carbon economy.

Outdated dealer franchise laws have been used as protectionism to prevent Tesla and other new EV manufacturers from opening stores in CT.

The EV Club is behind a new act, The EV Freedom Bill, that has been submitted to the legislature. It proposes that manufacturers that produce exclusively electric vehicles and have no existing franchised dealer network be permitted to sell their vehicles directly to the consumer. The definition of “sell” is inclusive. It encompasses sales, leasing, delivery, and service. It is important to specify these components. For example, even though Tesla has gained the right to lease (and conduct test drives) at its Milford service center, customers still have to go to New York to pick up their vehicles. (Even residents of the eastern part of the state must go to NY – they are not permitted to avail themselves of Tesla facilities in RI or MA.) The proposed bill also allows for new “ownership” models, such as subscription. The world is changing.

The bill obligates manufacturers to meet existing consumer protection laws (i.e. lemon laws) or regulations and to have an adequate plan to service their vehicles within the state.

Multi-State ZEV Action Plan

The state of CT is a signatory to the Multi-State ZEV Action Plan. This plan commits to getting 150,000 EVs on the road by 2025 and 500,000, about 20% of the fleet, by 2030. There were 12,624 as of July 1, 2020. That means we would need a compounded annual growth rate (CAGR) of 47.29% to hit the 2030 number, which translates to the state being in a pretty big hole. The chart below tracks needed CAGR for each data point I have since 2017. In this case, a rising line is a bad thing. (An updated number for January 1 is due to be reported soon.)

The ZEV Action Plan sets a goal but has no enforcement mechanism. It consequently relies on legislators, regulators, and citizens to make good decisions in order to get us there. The EV Freedom Bill is something that can have real near-term impact. Unlike other measures, such as purchase incentives, this will not cost the state any money. To the contrary, opening the state to innovative EV business models will increase buyer choice while positively contributing to public health, the achievement of our stated ZEV and emission-reduction goals, while generating revenue.

Opposition From Entrenched Interests

The roadblock to direct sales has been the dealership franchise laws. These laws, dating to the 1930’s, were passed at the time to protect independent business people who were opening dealerships to retail and service the products of an affiliated manufacturer. That was the manufacturers’ preferred method of expansion. But independent businesses, having gone to the trouble of establishing a market locally, sought to protect themselves from the possibility that an affiliated manufacturer would open up across the street and put them out of business. At the risk of repetition, the point was dealers seeking protection from their own affiliated manufacturers. These laws have now been re-purposed to prevent a manufacturer that doesn’t have a dealer network from opening stores. (It is due to these laws being so old that Tesla is now able to lease from its New Milford facility. Leasing didn’t exist at the time the laws were written and, therefore, wasn’t specifically prohibited.)

The auto dealership and manufacturer associations have effectively mobilized to block direct sales when it has come before the legislature in the past. They’re effective lobbyists. We would like to see them devote this level of effort to selling EVs.

Existing Auto Companies/Dealerships Not Selling EVs

It pains me to type that headline and I hope it changes at some point. This club supports all EVs, but we also have to recognize reality, and consider that this industry needs to evolve or adapt its model.

Tesla and other EV companies don’t want dealerships. Their position is that this model doesn’t work for them and they have a point! Legacy manufacturers have been slow to pivot to EVs and dealers have been even slower to sell them. This has been reported on extensively, by the NY Times, by the Sierra Club (74% of dealers nationally were not selling EVs in 2019), and others, including the EV Club of CT.

In the most recent EV Club analysis of DMV data, we saw that from July 2019 to July 2020, there was a net increase of 1827 EVs in the Department of Motor Vehicles’ registration file. 1361 of these were Tesla, a whopping 74%.

Club analysis of CHEAPR data similarly shows that less than 40% of the dealerships in the state have disbursed at least 10 rebates over the course of 5 plus years.

Aside from direct sales, other models are bubbling to the surface. One striking example is in Germany where Volkswagen has given up on its dealers to sell EVs. The company has gotten some good reviews for its ID.3 model (not available in the US) and has a larger, forthcoming ID.4 for which it is taking reservations. Sales of these vehicles in Germany are handled through VW Corporate. The dealers act as agents, providing test drives and delivering vehicles, for which they receive a fee. Importantly, the dealers do not take title to the cars, which changes the sales dynamic completely. This means that VW is taking on a major risk in terms of carrying costs, but nonetheless, feels it is worth it. UPDATE – Apparently, it is worth it. FeedSpot reports that with a successful introduction of the ID.3 in September, “Volkswagen passenger cars managed to leap to the number one spot in all-electric vehicles over the full-year 2020 with a share of 23.8% in Germany…”

It’s Not Only About Tesla

There are numerous EV startups poised to enter the market, and several that are taking reservations, such as Rivian and Lucid, have announced they plan to sell directly to consumers.

Even though the word “Tesla” was not included in previous versions of “direct sales” bills, those bills were written in such a way that they were only applicable to Tesla. The EV Freedom Bill applies to all EV manufacturers without a dealer network.

It Is About the Consumer

A study by Cox found that just one in three consumers were “very satisfied” with the dealership experience.

The Federal Trade Commission has blogged about this subject. Two sentences: “Dealers contend that it is important for regulators to prevent abuses of local dealers. This rationale appears unsupported…” “Such change can sometimes be difficult for established competitors that are used to operating in a particular way, but consumers can benefit from change that also challenges longstanding competitors.”

It Is About Connecticut

CT is the only state in the region that does not permit direct sales. Keeping out companies that manufacture environmentally friendly products sends exactly the wrong message to the kinds of innovative companies we seek to attract to the state to grow the economy. It undercuts what the state is communicating with the TCI, offshore wind, and the ZEV MOU.

Tesla and these new companies want to sell EVs in CT. Let’s let them. Let’s encourage them. Let’s buy them!

Note:

The bill now has a number: SB 127.

Please join us and reach out to your state legislators telling them you support this bill.  We need to lower our carbon footprint now. This really is a power of the people moment. If they hear from you, they will take notice.

An easy option is to use the Engage page that Tesla has set up. Non-Tesla owners can use it, though you will need to set up an account. It has a form letter, which can be customized. It will know who your legislators are.

You are also welcome to write your own thoughts. This is an online page that enables you to find out who your legislators are.

Community Choice Aggregation Can Provide a Cleaner Grid and Lower Electric Rates

EVs enable us to drive with zero emissions. But EVs can be an even cleaner choice when the electricity used to charge the battery comes from a clean grid.

On December 2, at 7:00 PM, the club will host a Zoom meeting where the featured speaker will be Peter Millman of People’s Action for Clean Energy (PACE). He will be speaking to us about Community Choice Aggregation (CCA) and how we can go about making this an option for CT residents.

CCA involves communities controlling power procurement and offering modern energy products and services. These include programs that encourage more rooftop solar, battery storage, energy efficiency, demand response, and EV infrastructure. The goals of CC are to reduce energy costs, lower GHG emissions, and increase resilience. The utility still owns, operates, and maintains the distribution infrastructure.

This is on the docket of the Public Utilities Regulatory Agency (PURA), but it requires action by the legislature as well. Peter will explain the details, the next steps, and what citizens can do to support this initiative.

CCA is operational in a number of other states where it has successfully enabled a cleaner energy mix and lower electric rates.

CCA can happen. This is not tilting at wind turbines!

EV Club and CFE

The EV Club of CT and the CT Fund for the Environment (CFE) are hosting a meeting on July 15 at the offices of the CFE. The meeting will begin at 7:00 PM. The CFE address is 900 Chapel Street, Upper Mezzanine.

Agenda

Aside from being an opportunity to get to know one another, the agenda includes a recap of this year’s legislative session, planning for Green Wheels during Drive Electric Week, and a proposed event to be held at the Lime Rock racetrack.

Come join us on the 15th!

Representative Jonathan Steinberg (D-136) Kicks Off The Session By Advocating for Added CHEAPR Funding (Photo: Bruce Becker)

Presenters: Dana Lowell (not pictured) of MJ Bradley and Associates; (left to right) Emily Lewis, Policy Analyst for Acadia Center; Mustafa Salahuddin, president of the Amalgamated Transit Union Local 1336 in Bridgeport; and Kevin Killer, Director of Public Policy for Chargepoint

A full house

A full meeting room of people assembled to hear a panel on EV public policy, specifically the economic benefits of moving to more extensive EV adoption. Along with the panelists noted above, the crowd also heard from Representatives Jonathan Steinberg (D-136, Westport) and Roland Lemar (D-96, East Haven), who is co-chair of the Transportation Committee. The panel was co-moderated by Claire Coleman, climate attorney for the CT Fund for the Environment, and Bruce Becker, president of the Electric Vehicle Club of CT.

The topic of the panel was how increased adoption of EVs will confer significant economic benefits to the state of CT and its residents.

Among the specific topics covered were continued funding of CHEAPR, the state program of rebates for EV purchasers; time-of-use utility rates; the impact of EV charging on utilities and ratepayers; and the benefits of moving to electric buses in our transit systems. For example, Mr. Lowell pointed out that, by law, the additional net revenues that would flow to utilities from EVs plugging in would have to be returned to ratepayers, lowering bills by an average of about $150 annually. And, if the charging were to occur primarily during off-peak hours, this would contribute to smoothing the power-utilization curve throughout the day. A good summary of the proceedings can be found in a write-up done by The Day of New London.

The EV Club of CT showed up in force for the day’s events, which included meetings with legislators and legislative aides in addition to the forum. Aside from Becker, club members Phil Levieff, Dawn Henry, R. Murali, Demetri Spantidos, Analiese Paik, Virgil de la Cruz, and Barry Kresch made the rounds.

The Department of Energy and Environmental Protection (DEEP) issued the attached Notice of Technical Meeting for February 8, 2019, from 9 a.m. to 4:30 p.m. ET, in the Gina McCarthy Auditorium, DEEP Headquarters, 79 Elm Street, Hartford, Connecticut. 

The purpose of the technical meeting is to inform the recommendations of the EV Roadmap. The technical meeting will consist of four panel discussions with subject matter experts presenting on key topics, followed by a question and answer session with the audience. 

November 26, 2018

AN ELECTRIC VEHICLE ROADMAP FOR CONNECTICUT

NOTICE OF SCOPING MEETING AND OPPORTUNITY FOR PUBLIC COMMENT

As recommended by the Comprehensive Energy Strategy issued on February 8, 2018, the Department of Energy and Environmental Protection (DEEP) initiates this proceeding to develop an electric vehicle roadmap (EV Roadmap) for Connecticut. The EV Roadmap is anticipated to identify Connecticut-specific policies, programs, and strategies that the State of Connecticut should pursue to optimize deployment of electric vehicles (EVs) and associated infrastructure. Moreover, the EV Roadmap is intended to support development of a self-sustaining EV market, and ensure that increased electricity demand from EV deployment is a benefit rather than an impairment to the electric grid.

DEEP will conduct a scoping meeting on December 14, 2018, at 10 a.m. EST, in Hearing Room 2 at DEEP’s New Britain Office, Ten Franklin Square, New Britain, Connecticut. The purpose of the meeting is to brief stakeholders on the proposed scope of the EV Roadmap proceeding and to take public comment on the proposed scope of the EV Roadmap, which is provided below.

Draft Scope EV Roadmap

Overview

The EV Roadmap will outline the 2030 vision and objectives necessary to support the deployment of increasing numbers of light-duty zero emission vehicles (ZEVs) in Connecticut necessary to meet air quality and climate goals and to inform the parameters DEEP will consider when soliciting electric vehicle supply equipment (EVSE) infrastructure proposals under the VW NOx Mitigation Grant. In so doing, the document will review and describe a summary of user trends and projections, regional and federal efforts to date, and zero emission options beyond light-duty fleet applications.

Accelerating ZEV adoption and creating a robust fueling infrastructure Even with increasing demand, a growing roster of vehicle models, and an expanding network of both public and private infrastructure, the EV market is still in an early stage of maturation. To further support development of a self-sustaining EV market and the necessary infrastructure, the EV Roadmap will build on existing efforts already underway and make recommendations on the following elements:

• Education, outreach, and marketing
• Public and private fleet strategies
• Sustainable funding in the form of incentives, financing, manufacturer partnerships, or other
• Partnering with dealerships
• Bringing clean transportation options to low- to moderate-income communities
• Streamlining building codes and permitting
• Future proofing
• Interoperability
• Consistency of customer experience
• Data collection (EV registrations, charging station data, etc.)

Fueling/charging cases

Increasing market penetration of ZEVs requires increased deployment of fueling/charging infrastructure. In turn, accessible and reliable infrastructure will support and encourage further adoption of ZEVs in the state. Building out self-sustaining fueling/charging networks will require ongoing private-public partnerships and open communication to ensure that planning efforts are coordinated among multiple fueling/charging cases, including public, residential, and workplace charging.

The EV Roadmap will discuss and make recommendations on the following fueling/charging cases:

Public

• Public charging infrastructure ownership models
• EV fast charging
• Corridors, destinations, state facilities and properties, around town
• Hydrogen refueling stations

Residential • Single family homes

• Multi-unit dwellings

Workplace

• Workplace charging opportunities
• Outreach to promote workplace charging
• Opportunities to reduce impact of charging during peak hours
• Workplace charging host guidance
• Leadership recognition

Rate design and demand charges

Rate design and demand charges for residential, commercial and industrial customers set market signals. Market signals may be necessary to encourage beneficial off-peak charging that improves the efficiency of the grid and reduces costs for all electric ratepayers. Further, ZEVs can be a demand- response resource and/or function as distributed energy storage, enabling a reduction in investments in new electricity infrastructure and shifting load from peak to off-peak hours.

The EV Roadmap will explore and recommend crafting a rate design and demand charge strategy that encourages EV adoption while mitigating adverse electric demand and costs and harnesses the benefits of EV flexible load capabilities.

ZEV’s beyond light-duty vehicles

The EV Roadmap will discuss emerging applications for medium- and heavy-duty vehicle and non- road electrification in order to identify cost-effective strategies that target transportation electrification opportunities beyond light-duty vehicles including fleet and freight applications.

Planning forward with VW EVSE

As a part of the Volkswagen settlement, Connecticut has been allocated almost $56 million for use towards offsetting the excess oxides of nitrogen (NOx) emissions caused by VW’s actions. DEEP’s plan for the allocation of VW funds is set forth in the State of Connecticut Mitigation Plan and focuses on extensive mitigation projects to reduce NOx from a wide array of mobile sources. In accordance with a federal Consent Decree (Appendix D-2), Connecticut reserved up to 15 percent of these funds for electric and hydrogen vehicle infrastructure/EVSE.

EVSE project funding, like NOx mitigation funding, will be awarded through an open, competitive and transparent process that will comply with all applicable state and federal procurement requirements.

In November 2018, DEEP issued $12.1 million for a variety of clean air projects. DEEP will offer additional rounds of funding at a later date and will include a competitive grant opportunity for electric and hydrogen vehicle charging/fueling infrastructure. The EV Roadmap will both inform and outline funding priorities in this category.

DEEP plans on following the preliminary timeline detailed below:

Action Preliminary Timeframe DEEP initiates EV Roadmap proceeding and notices scoping meeting November 21, 2018 DEEP scoping meeting December 14, 2018, at 10:00 a.m.

Comments due on proposed scope December 20, 2018, by 4:00 p.m.

DEEP technical meeting January 2019 DEEP issues draft EV Roadmap February 2019 DEEP hearing on draft EV Roadmap February 2019 Comments due on draft version EV Roadmap March 2019 DEEP issues final EV Roadmap April – May 2019

By way of this Notice, DEEP is accepting public comment on the proposed scope of the EV Roadmap proceeding through December 20, 2018, by 4:00 p.m. EST. Written comments may be filed electronically on DEEP’s website or submitted to DEEP.EnergyBureau@ct.gov. All materials submitted by stakeholders in this proceeding will be posted on DEEP’s Energy Filings website under the matter “EV Roadmap.” Any questions can be directed to Debra Morrell at (860) 827-2688 and/or via e-mail at DEEP.EnergyBureau@ct.gov.

The Connecticut Department of Energy and Environmental Protection is an Affirmative Action/Equal Opportunity Employer that is committed to complying with the requirements of the Americans with Disabilities Act. Please contact us at (860) 418-5910 or deep.accommodations@ct.gov if you: have a disability and need a communication aid or service; have limited proficiency in English and may need information in another language; or wish to file an ADA or Title VI discrimination complaint. Any person needing a hearing accommodation may call the State of Connecticut relay number – 711. Requests for accommodations must be made at least two weeks prior to any agency hearing, program or event.

Notice filed with the Secretary of State on November 26, 2018.

The Electric Vehicle Coalition of CT has sent an open letter to the Public Utilities Regulatory Authority that communicates key principles with respect to EVs and grid modernization.

Bruce Becker, President of the EV Club of CT, stated, “A study by Natural Resources Defense Council (NRDC) indicates EV adoption will reduce utility bills for all CT customers by $500 million by 2050 while reducing vehicle operating costs for EV owners by $1.9 billion. Therefore, PURA must incentivize EV adoption to make energy cheaper and cleaner for CT residents.”

The full text of the letter is below:

September 26, 2018

Jeffrey R. Gaudiosi, Esq. Executive Secretary

Public Utilities Regulatory Authority

10 Franklin Square

New Britain, CT 06051

Re: Docket No. 17-12-03: PURA Investigation into Distribution System Planning of the Electric Distribution Companies, Electric Vehicle Coalition Principles on Grid Modernization and Electric Vehicles

Dear Mr. Gaudiosi:

The CT Electric Vehicle Coalition,a diverse group of clean energy advocates, organized labor, and environmental justice groups, commends PURA for including electric vehicles in its scope of the Grid Modernization proceeding. Electric vehicles (EVs), which encompass not just passenger vehicles, but medium-and heavy-duty vehicles, are critical technologies Connecticut must deploy to meet its greenhouse gas (GHG) reduction requirements and Zero Emission Vehicle Memorandum of Understanding commitments. EVs have zero tailpipe emissions, and even with New England’s electricity mix today, these vehicles cut GHG emissions as much as 75% compared to conventional vehicles.(1) These emissions savings will only increase as the region continues to clean and modernize the electric system. Importantly, EVs also reduce harmful air pollution, create economic development opportunities, and reduce reliance on imported petroleum fuels. Recognizing these benefits, the state has committed with other Northeast and West Coast states to put 3.3 million of these vehicles on the road by 2025.

Utilities could help spur the advancement of EVs through a range of new policies and programs.  Smart integration of EVs into the grid can help maximize GHG emissions reductions by optimizing grid utilization. Through appropriate customer signals, the flexible load of EVs can better integrate renewable resources or shift load by charging at periods of low demand. These changes improve the efficiency of the grid and reduce costs for all ratepayers, while at the same time improving the economics of operating an EV. Broad deployment of EVs also hinges on widely available charging infrastructure, which utilities have a role in supporting. Utility investment in make-ready infrastructure, for example, can complement the competitive market, address coordination problems, and help to overcome barriers to entry in important market segments, including low- income communities and multi-family housing.

Utility programs and investments to support EVs must align with broader principles of utility regulation, including grid modernization and rate design. As such, the CT EV Coalition requests PURA to consider the following principles, particularly how they impact EV deployment, within the Grid Modernization docket.

(1) Acadia Center, Energy Vision 2030, available here: http://2030.acadiacenter.org/

PRINCIPLES ON GRID MODERNIZATION AND ELECTRIC VEHICLES IN CONNECTICUT

• Rate design must be improved. Granular, efficient, and technology-neutral pricing must be developed to support new technologies and promote Connecticut’s public policy goals. Demand charges are a major barrier for several EV charging applications, and Connecticut has a beneficial pilot that eliminates demand charges for certain types of EV charging stations. Further reforms to rate design, including broader adoption of time of use rates without demand charges, can simultaneously accelerate EV adoption and incentivize EV charging at optimal times.
• Equity and access should be incorporated into a wide range of EV programs. This includes rate design and programs to increase access to electric transportation and EV charging stations in underserved and marginalized communities.
• Education and outreach strategies are needed to support well-designed programs. Consumer awareness and understanding are crucial to adoption rates and achievement of program goals.
• Distribution system planning must be improved to include local clean energy alternatives to traditional infrastructure. Methods must be developed for a stronger consideration of clean, local resources, including EVs as flexible load and distributed storage.
• Promotion of interoperability and data disclosure should be conditions of participation in utility investment programs. Connecticut should generally apply consumer-friendly regulations to all public EV charging stations, notably pricing disclosure, measurement accuracy, and open access. In addition, key charging station objectives can be included conditions of participation in utility investment programs, such as interoperability of charging connectors and data disclosure.
• The utility business model must be changed to incentivize policy-driven outcomes. Utilities must shift their business model to rely less on return on capital investment and more on performance incentives for consumer and environmental outcomes.
• Utility benefit-cost calculations must be updated to reflect the public interest. These calculations should be applied to all types of new utility investments, including those that facilitate EVs. Through this proceeding, PURA could explore options for including GHG reductions and petroleum fuel savings in benefit-cost calculations.
• Robust stakeholder input and processes are needed to inform any utility programs.

The Connecticut EV Coalition respectfully requests that this multi-phase grid modernization proceeding include a track to carefully evaluate regulatory mechanisms to ensure smart integration of EVs into the grid, which takes into consideration the grid modernization principles above, and addresses the appropriate roles for utilities with respect to EV acceleration and deployment of EV charging infrastructure. We look forward to engaging with PURA on these important topics.

Respectfully submitted,

The Connecticut Electric Vehicle Coalition

• Acadia Center*†
• Connecticut Fund for the Environment*
• Connecticut Nurses Association
• Connecticut Roundtable on Climate & Jobs*
• Connecticut Citizen Action Group
• ConnPIRG
• Conservation Law Foundation
• ChargePoint*
• Chispa-CT*
• Clean Water Action*
• CT League of Conservation Voters
• Drive Electric Cars New England
• Eastern CT GreenAction
• Electric Vehicle Club of Connecticut*
• Energy Solutions, LLC
• Environment Connecticut*
• Greater New Haven Clean Cities Coalition, Inc.
• Hamden Land Conservation Trust
• Hartford Climate Stewardship Council
• International Brotherhood of Electrical Workers*
• Interreligious Eco-Justice Network
• New Haven Climate Movement
• Northeast Clean Energy Council
• People’s Action for Clean Energy
• Proton On Site
• Plug In America
• RENEW Northeast
• Sierra Club*
• Solar Connecticut, Inc.
• Tesla, Inc.
• Union of Concerned Scientists

* Connecticut EV Coalition Steering Committee Membership

First Tesla Model 3 in CT

Westport Electric Car Club Member Bruce Becker is the recipient of the first Model 3 from Tesla to be delivered to Connecticut. As an existing (or should we say pre-existing) Tesla owner of a Model S, along with an early dive into the packed reservation queue, Becker was able to land his prize. The only way to have gotten it sooner would have been to be a Tesla employee. As of the end of January, Tesla had only delivered 3,647 units of the Model 3 with a backlog of over 400,000 non-binding reservations.

A gathering at the charging stations outside of Staples High School in Westport brought a number of onlookers and local officials. The timing is propitious as the CT State Legislature has just convened it’s “short session.” There will be another push to pass legislation that would allow Tesla to open stores in Connecticut, which is one of only a handful of states that do not permit this. As a result, CT residents have to travel to neighboring states to purchase, depriving CT of millions in lost tax revenues, not to mention the economic activity that would result from Tesla investing in facilities and hiring locally, and not to mention that Tesla manufacturers clean transportation vehicles in the USA.

The Westport Electric Car Club has started a petition to tell our legislators to support this legislation. It is easy to virtually support this effort. Just text “EV CT” to 52886.

Bruce Becker, Model 3 Owner. Yes, that’s a BMW i8 in the back/center (Photo: Barry Kresch for WECC)

Details

Becker described the Model 3 as providing an exceptional driving experience, smooth, quiet, responsive, more fun even than his Model S.

 Westport First Selectman Jim Marpe was checking out the goods. (Photo: Barry Kresch for WECC)

View of the trunk and panoramic glass roof. (Photo: Barry Kresch for WECC)

Here is the “frunk.” No engine = more storage. (Photo: Barry Kresch for WECC)

All of the controls are part of the screen. Otherwise, the dash is a clean laminated strip, partly visible here between the screen and the steering wheel. (Photo: Barry Kresch for WECC)

Please support our petition. The legislature is on a short timeline to act and now is the time to be heard.

CHEAPR

States have been going their own way, whatever the direction of what may be happening Federally. Connecticut has been a consistent supporter of EV adoption and reduced emissions on a number of fronts. And with good reason, as the Department of Energy and Environmental Protection (DEEP) estimates that the transportation sector accounts for about 40% of emissions statewide.

CHEAPR, which stands for Connecticut Hydrogen and Electric Automobile Purchase Rebate, offers rebates to purchasers of plug-in or fuel-cell vehicles. The program began in May 2015. It was announced in November 2017 that another round of funding had been procured to replenish the pool, bringing the total funding since the program’s inception to $5,064,500. According to the CHEAPR website, 2,332 rebates have been issued since the program started, and the amount of funds remaining stands at $1,093,250 These numbers are as of January 11, 2018. (That website link can be used to access all details about CHEAPR.)

Unlike the Federal tax credit, CHEAPR is a rebate so it is of use to people who are not in a position to utilize a tax credit. Some dealers will do the paperwork and just deduct it from the invoice. Unlike the Federal program, there is a $60,000 cap on base MSRP for eligible vehicles. If you are aware of CHEAPR but haven’t checked lately, there were changes made in August 2017 with respect to which vehicles qualify for each level rebate. The maximum rebate was raised to $5,000 (for fuel-cell vehicles, which are expensive). Other rebate levels are $3,000, $2,000, and $500 based on car type and electric range.

There are 3 fuel-cell vehicles on the eligibility list. We’d like to ask our readers, has anyone seen any of them “in the wild” in CT?

Charging Infrastructure

Connecticut has supported charging stations as well as provided credits to municipalities to install charging stations through the Clean Energy Communities Program. In Westport, where town administrations have been supportive of the club’s efforts, there are 19 public charging stations that have been obtained in this way. They are located at the two Metro-North stations, the public library, Staples High School, and town hall. There are two other charging stations downtown that were installed by the Tri-Town Teachers Credit Union and Karl Chevrolet. Of these 21 charging stations, 17 are level 2 and 4 are level 1. In addition, there are other chargers in nearby towns as well as at certain rest stops on the expressways. The expressway chargers are level 3 fast chargers. And, of course, Tesla has built out its own proprietary charging network which spans the country.

CT is a member of the CARB consortium of states that follow the stricter California emissions requirements. CT is also one of the ZEV states, a subset of the CARB states, that mandate the sales of zero-emission vehicles.

Still No Direct Sales Bill

The other, more dubious, news is that CT remains a Tesla-free state (one of only 5 nationally, none in the Northeast), meaning that the company is not permitted to open stores in CT. In 2017, as in 2016, the “Tesla Bill” failed to make it to a vote in the legislature. Let’s keep in mind that the most widely-owned EV marque in CT is Tesla, but customers are forced to either travel out of state or transact online. It has been reported that the state is losing $15 million per year in sales tax revenue plus the revenue from the investment in facilities and employment. The bill is up for consideration again in this year’s “short session.” Contact your state legislators and tell them you support this bill.

So why do we need an “act of Congress,” so to speak, for Tesla to be able to do business here? It’s all about the dealer franchise laws. These laws were created many decades ago and the purpose was to protect dealerships (which are independently owned businesses) from predatory competition from the manufacturers they represent. There was never any Tesla-type scenario envisioned at the time these laws were written. And given the decidedly mixed reception that the dealer networks of the legacy manufacturers have given EVs, along with the fact that close to 99% of new car sales are still of the internal combustion variety, it is understandable why Tesla has a business model focused on direct sales.

The proposed compromise that was unsuccessful in CT would have carved out a narrow exception to the franchise laws that would fit Tesla (and nobody else, at least not at present. For a more detailed explanation of the bill, see our earlier blog post discussing it.) But Tesla has had some success in other states in arguing that the franchise laws simply don’t apply. Just this month, according to the Providence Journal, DMV lawyers in Rhode Island concluded that franchise laws only apply to manufacturers with franchisees. Residents of Eastern CT can pay a visit to the Tesla showroom opening in Warwick, RI later this year.

Model 3

Some people have asked us if a Tesla Model 3 is eligible for the rebate since it is not sold in the state. It is. (The only thing to watch out for with respect to the Model 3, where there is currently a lengthy lag from reservation to delivery, is that the funds don’t get applied until there is a VIN number which doesn’t happen until the vehicle is in production. CHEAPR funds have been replenished several times to this point, but the availability is not guaranteed indefinitely.)

For folks interested in supporting Tesla coming to CT, the company has set up a Facebook

page and a website has been set up by a local group of Tesla owners. Also, please sign our online petition by texting “EV CT” to 52886.

Federal Tax Credit

There is a Federal tax credit of up to $7500 for the purchase of a plug-in vehicle. The amount of the credit depends on the size of the battery. This tax credit originated in the Energy Improvement and Extension Act of 2008 (George W. Bush administration), though it was amended in the Recovery and Reinvestment Act (a.k.a. “Obama Stimulus Package) in 2009. 2018 could be “the year of the ceiling.”

There was some suspense regarding whether the credit would survive the 2017 GOP tax bill given an administration that is doubling down on fossil fuels. The House version of the bill eliminated it. The Senate version retained it, and in the end, it survived. (A proposal arising late in the Obama Administration to change the incentive from a credit to a point of sale rebate and raise it to $10,000 was not able to get serious consideration in this Congress.)

Though the survival of the tax credit may sound counter-intuitive given the current political climate, there is evidence that even though EVs are relatively new, they have established a presence economically. Fortune reports that 50 companies, including major auto manufacturers and Uber, sent a letter urging Congress to retain the credit. The Detroit Free Press reports data compiled by the US Energy Department saying that EV production in this country is responsible for over 215,000 jobs.

It also happens not to be without controversy among vehicle manufacturers, particularly Tesla and General Motors, which will feel its distorting effects first.

Unit Threshold

The credit has a ceiling of 200,000 units applied to a given manufacturer. Once a manufacturer sells unit number 200,000, the credit remains in place for the current and subsequent quarters (to service the pipeline). It is then halved (up to $3750) for the next 6 months, halved again (up to $1875) for another 6 months, and then it goes away entirely for that manufacturer. In other words, the players who jumped first into the deep water will become price-disadvantaged relative to the laggards.

Tesla and General Motors have sold 161,771 and 168,183 respectively through 2017. Both are certain to crack the 200,000 level during 2018 and lose the credit at some point in 2019. Tesla will probably get there first if it succeeds in ramping Model 3 deliveries. The YouTube Channel, Teslanomics (a relatively conservative forecaster) expects Tesla to get to this level in the second quarter. GM, at its current run rate of over 5,000 plug-in units per month, will not be that far behind. And if Nissan, another early entrant, has success with its new generation of the Leaf, it too, could reach this point in the relatively near term. Nissan has sold 114,808 Leafs to this point. These companies will face some big pricing decisions and pressure to maximize cost-control in order to stay competitive.

Importance of EVs to Forestall Climate Change

According to a report issued by the Union of Concerned Scientists, “Electric vehicles are central to reducing oil consumption and transportation-related emissions in the United States.” And incentives matter at this stage of the game. In the one instance where there was a real “light switch” test, the State of Georgia, which initially had generous EV incentives in the form of a $5,000 rebate, discontinued it in 2015 and EV sales dropped by 89% in the span of two months. In California, a state that has been among the most aggressive in deploying various incentives, EVs represent 5% of new vehicle sales (as opposed to 1% nationally).

With all of the wrangling over the EV incentives, let’s not forget that the fossil fuel industry continues to benefit from preferential tax treatment in the form of expensing of intangible drilling costs, domestic manufacturing deduction, depletion allowance, acceleratated amortization, and inexpensive Federal leases. This was estimated by the Wall Street Journal to be worth $4.76 billion per year. Also keep in mind that externalities, the effects of burning the stuff, drilling/fracking for it, transporting it, or accidentally spilling it are not taxed. There are Federal and State gas taxes, though the Federal tax hasn’t been raised since 1993. This has kept gasoline prices in the USA lower than most of the world. The average price for a gallon of gasoline domestically is 55% lower than the worldwide average (January 2018).

With respect to the Federal tax credit, what we have may be better than nothing, but we like the Obama-era proposal to turn the tax credit into a rebate. Not everyone is able to benefit from a tax credit. And we would like to see the sales-unit cap removed.

In terms of how long incentives might be needed, according to data from the Union of Concerned Scientists, it is estimated that with continuing improvements and cost reduction in the technology, the cost curve for EVs may cross that of internal combustion vehicles by about 2025.