Rivian Service Center in Shelton is Finally Open

After a lengthy legal battle, followed by the time necessary to build out the facility, the Rivian Service Center in Shelton, CT has finally opened. Rivian R1S owner and EV Club member, Jeff Manfredonia, sent us these pix after his recent service experience, which he characterized as “excellent” and which included a tour of the facility (no pix allowed in the service area).

The facility is located at 2 Mountain View Drive in Shelton, east of Route 8 and west of the Housatonic River. It was a long road to get to this point.

Dealerships Do Everything They Can to Interfere With Automakers That Use A Direct Sales Model

As we have seen happen with Tesla, a local dealership will step in with a lawsuit using the pretext that the company plans to violate the law. In the case of Tesla, East Hartford was successfully bullied into rescinding a permit, and South Windsor, after the dealerships showed up in force for a hearing, was afraid to grant one. The legal action in the case of Rivian was filed by the local dealership, Mario D’Addario Buick, and TD Properties. The complaint followed the same playbook with the same made-up accusation. The specific language in the filing said Rivian planned to engage in the “sale of new and used Rivian vehicles in violation of Connecticut law.” (For the record, the franchise laws apply only to new vehicles.)

After a favorable ruling and an unsuccessful appeal by the plaintiff, Rivian ultimately prevailed. We published multiple blog posts describing these events in this and two earlier posts.

Shelton granted zoning approval in October, 2022 and the subsequent 12 months were consumed by the litigation. The final denial of the plaintiff’s appeals and motions for reconsideration occurred on October 18th, 2023. Rivian then had to renovate the structure for its purposes.

The Facility

This is a service facility with a visitor lounge and service area. There is no showroom and no sales activity of any kind takes place there. The facility will not be used for the delivery of new vehicles. There were reports that Rivian was considering this. We don’t know definitively if that was true but if that were the case, it would skate close to the line drawn in the franchise laws.

Rivian Electric Van

Aside from the R1T pickup and R1S SUV, Rivian manufactures an electric van. The one in the photo is used for Rivian mobile service. The company has an order of 100,000 delivery vans from part-owner Amazon.

Incentive Suspension

This game of chicken that Eversource and UI are playing with the Public Utilities Regulatory Authority has now gotten to the point that EV charging incentive programs are being suspended.

Eversource and UI have essentially the same program whereby they subsidize the purchase and installation of charging equipment. These funds are recovered from ratepayers. EV owners who take advantage of the incentives are required to participate in a managed charging program that pays them to shift their charging to avoid high demand periods. This suspension is not only disruptive for consumers and businesses, it is self-defeating for the larger picture of using demand levers to improve the efficiency of utilizing the grid.

Timing

The UI incentives are already suspended.

Eversource has suspended the Level 3 DC fast charging program. Applications for the Level 2 incentives remain open through May 22nd. After that point, any submissions go on a wait list.

If you are in the process of buying and installing a new charger, the installation must be complete and paperwork filed by May 22 to avoid being waitlisted.

Those who install residential chargers in this pre-suspension period have until June 22 to complete their managed charging enrollment to finalize their eligibility.

New and existing participants in the managed charging program will continue to be paid through the end of the year.

We will provide updates as they become available.

One final note – There are a few municipal utilities in the state that offer incentives for EV charging. These utilities are not regulated by PURA and have nothing to do with the actions of Eversource and UI. The incentive programs at these other utilities tend to be simpler in design, usually covering the charging hardware and installation, but without the managed charging component.

All graphics from CT Department of Transportation

The Next Shoe to Drop?

Once upon a time, there was free public charging. Well, there wasn’t that much charging infrastructure, but there were grants available for level 2 chargers that came with the proviso that the juice be dispensed gratis for a period of time. It made the business model about the grant, never a great idea. Many of these chargers fell into disrepair. Why spend money on maintenance if you don’t charge for the juice?

It did, however, give the impression that EV owners felt “entitled” to free charging, though that is stretching the point to say the least.

The other “free ride” that EV owners get, BEV owners anyway, is that they do not pay anything, namely gas taxes, that support the transportation fund that finances the upkeep of our roadways. That is changing as a number of states have begun imposing various fees. The landscape is mixed at this point, but one thing that seems clear is a lack of analytical thinking combined with thoughtful policy making.

Let’s look at the unexpected case of blue New Jersey, which arguably takes the prize for the most conflicted set of EV policies you can find.

How Not to Tax Electric Vehicles

Prior to a bill signed by Governor Murphy in March, NJ had an impressive array of incentives. EVs are exempted from the sales tax. There is a generous EV purchase incentive (for new vehicles only) of up to $4000, although it has been haphazardly administered. (The legislature appropriates an inadequate amount of funding to meet demand, resulting in the program getting suspended when funds are depleted before the year is out. It gets revived when the next tranche of funding gets allocated the following year and the same cycle ensues. It’s confusing for both consumers and sellers.)

Now, in a bill signed by Governor Murphy in March, NJ has initiated a 3-year phase-out of the sales tax exemption and imposed a registration fee for EVs. The new EV fee, which applies to battery electric vehicles (BEVs), begins on July 1^st and adds a $250 annual fee to the existing registration fee. It then escalates $10 each year until it is capped at $290 in 2028.

When a consumer buys a new vehicle in NJ, they pay 4 years of registration fees in advance. Every EV will require payment of an additional $1000 to be registered, rising to $1160 in a few years.

And if you charge at a public charger in NJ, you also pay a 6.63% sales tax. (There is no sales tax on gas.) Sales taxes on public charging are not routine, though NJ is not the only state that has one.

Policy Environment

As background to this, New Jersey is one of the states that has adopted the second phase of the Advanced Clean Car rules. These are the rules that come from California having a waiver to create more stringent fuel economy standards than the EPA, and which other states can voluntarily adopt. The phase 2 rules mandate increasing percentages of electric vehicles be sold each year until 2035 when the sale of new internal combustion (ICE) vehicles becomes prohibited. 80% of new EV sales are required to be BEVs. (Connecticut followed the phase one rules which expire in 2025 but has not adopted the phase 2 rules.)

Policy matters. Incentives matter. In 2015, the state of Georgia repealed its $5000 EV purchase incentive while simultaneously imposing a $200 registration fee. In a matter of one month, EV sales declined by 93%.

In NJ, with all these policy oars pulling in different directions, the state will create problems for itself and its residents in fulfilling the mandate. It would not be a surprise if they try to back away from it.

NJ isn’t the only state to impose an EV registration fee, though it does have the distinction of being the first in the Northeast, as well as the highest.

There are two reasons given to justify an EV registration fee. Both start with a kernel of truth that when scrutinized appear to be less than meets the eye. The first is that transportation infrastructure funds in the states are running out of money. These funds come from gas taxes. BEVs don’t use gas so they’re being singled out as the cause of this deficit.

While it’s true that BEVs don’t pay gas taxes, EVs are such a small percentage of the fleet that the impact today on transportation infrastructure funding is de minimis. The fees being levied on EVs in a number of states are punitive, meaning they are significantly greater than what would be collected in gas taxes from a similarly sized vehicle, and just high enough – like Georgia and likely NJ – to discourage EV adoption. Arguably, in some states, discouraging EV adoption is the point.

Inside EVs Senior Editor and YouTuber, Tom Moloughney, a NJ resident, reported on the NJ fee and quoted Pam Frank, CEO of ChargeEVC, who noted that the most widely registered vehicle in NJ is the Honda CRV which would typically pay $127 in gas taxes, or half the EV tax. The equivalent in CT with its lower gas tax is $87.

The main reason for the transportation funding shortfall is that ICE fuel economy has improved and gas taxes are not indexed to inflation, while road and bridge maintenance costs inexorably increase. Gas taxes are the third rail, or a third rail, of politics. Politics has way more third rails than Metro North. (The transportation fund in CT is flush at the moment, but this issue isn’t going away.)

The second justification offered is that EVs should pay a higher registration fee than ICE vehicles because they are heavier and do more damage to the roads. The facts don’t support this. If you compare like to like, an EV is somewhat heavier. The ICE Ford F150 weighs up to 5,697 pounds while the Ford F150 Lightning weighs up 6,897 pounds. But if we make a comparison with what vehicles are on the road, it’s a different picture. The F150, as noted, at 5,697 pounds is the most popular ICE vehicle in the country. The most popular EV is the Tesla Model Y (though due to its head start, there are more Model 3s registered). The Model Y weighs up to 4,398 pounds and the Model 3 weighs up to 4,034 pounds. There are plenty of ICE vehicles on the road that weigh more than just about any EV.

EVs are still on the technology curve. The new electric motors from Ford are lighter than their predecessors. Tesla’s structural battery pack saves several hundred pounds. As EVs gradually move to 800 volt architecture, they will shed weight due to less wiring.

More importantly, these weight differences are too small to matter. Again, from Ms. Frank, whose organization has reviewed multiple studies, road damage is predominantly caused by heavy-duty vehicles, those in excess of 26,000 pounds.

How Should EVs Be Taxed?

EVs will have to bear a share of the burden to fund infrastructure going forward, but how should we think about it? We don’t have the definitive answer, and the following is intended as a way to frame the question and look at the strengths and weaknesses of some of the options.

The first question is when such taxation should begin. EVs are an essential emissions reduction tool which is why policies have been enacted to encourage adoption. Moloughney suggests that when EVs reach 5% of the fleet is a good place to begin. In CT, EVs are currently about 1.5%.

With respect to taxation, there are different ways to go for both ICE and EV. Below are some of the of the options and the pros and cons of each.

Gas Tax

Pro

• • Tracks utilization.
  • Rewards fuel efficiency up to a point.
  • Picks up out of state drivers (and we have a lot of those transiting CT).

Cons

• • Gas taxes at current levels are not only insufficient to maintain necessary funding levels, but also don’t nearly compensate for the environmental and public health destruction from fossil fuels.
  • Regressive and politically difficult to raise.
  • No revenue from EVs.

Mileage tax

Pro

• • Tracks utilization.
  • Picks up EVs.

Cons

• • Does not capture out of state drivers.
  • Intrusive and potentially administratively burdensome.
  • Does not consider emissions or fuel efficiency.
  • Penalizes rural residents.

Tolls

Pro

• • Tracks utilization of the most heavily traveled roads without the intrusiveness of a mileage tax.
  • Collects revenue from out of state drivers.
  • Smart technology enables the ability to have discounts for lower income individuals, low emission vehicles (e.g. EZ Pass Green Pass), or time of use rates.
  • Picks up EVs.
  • Can more heavily toll the heavy-duty vehicles that damage the roads.

Cons

• • Requires investment to build the infrastructure.
  • Politically difficult. (When proposed in CT a few years ago, they ran into a political buzz saw, but they have some advantages relative to other options.)
  • Potential to direct more traffic onto local roads.

EV Registration Fees

Pros

• • Generates revenue from EVs.

Cons

• • Can potentially discourage EV adoption.
  • At current registration levels, an EV fee will not have a meaningful financial impact.

There is no single or right answer. There are judgment calls and trade-offs to make. The best answer may be a hybrid approach. This is something that can be analyzed, a step that should be taken before final taxation levels are set. There is also the question of whether the objective is to generate some revenue from EVs or whether it is to raise enough revenue to adequately keep pace with the needs of the transportation fund.

Ms. Frank feels that EVs should be taxed at a lower rate than ICE vehicles to maintain momentum on adoption and reward the lower emissions profile of electric vehicles, and suggests a fee of $75 in the context of NJ.

This is one possible approach.

• Raise the gas tax. It lags inflation. We don’t have a carbon tax or cap and trade. (Along with the EV tax, NJ is raising the gas tax.)
• When EVs reach 5% penetration, add an EV registration surcharge of $75.
• Implement tolling with the considerations noted earlier to minimize the burden on lower income individuals, encourage off-peak transit, and have trucks pay for the damage they inflict.

This is done without running the numbers. It is possible that not all 3 are needed.

The elephant in the room is the damage done by fossil fuels and the economic favoritism that has accrued to these incumbent businesses over the years.

According to the US Senate Budget Committee, cash fossil fuel subsidies cost the taxpayer about $20 billion per year. According to conservative economist Gib Metcalf: these subsidies offer “little if any benefit in the form of oil patch jobs, lower prices at the pump, or increased energy security for the country.”  But that is a major understatement in that the biggest subsidy is the ability to pollute for free. If we were to take that into account, the true cost would be $646 billion. And that is just the US. Worldwide, that number is closer to $5.4 trillion. For that reason, our suggested approach includes raising the gas tax in this context of no carbon tax or cap and trade.

What Is Behind This Extreme Action by Eversource and United Illuminating

The largest electric distribution company, EDC for short, (a.k.a. utility) in the state, Eversource, announced last week that it would suspend its participation in the EV charging incentive program. As reported in the Hartford Business Journal, Eversource will stop taking applications after May 22 for residential and commercial level 2 charging incentives and will not award level 3 DCFC incentives in 2024.

Eversource cites “uncertain regulatory treatment,” and complains they are not getting timely funding. This comes one day after it was awarded an 18.7% rate hike. PURA responds in part that Eversource has not yet received cost recovery because it did not ask for it by filing the required distribution rate amendment application.

Senator Norm Needleman, in a statement made to CT Public Radio, characterized Eversource’s actions as “threatening, vindictive, and irresponsible,” and disrespectful of ratepayers who are facing a substantial increase in their bills.

Not to be outdone, United Illuminating, which also recently received a rate increase, announced an immediate suspension of the EV charging incentive (as of April 12th). New applications are not being accepted. Applications submitted prior to April 12th but not yet approved will be placed on hold. UI will payout the incentives for approved projects, but there is no timeline for the payments to be made.

Our Take

This occurs against a backdrop of the Public Utilities Regulatory Authority, PURA, trying to shift the nature of the regulation to incentivize the EDCs to support transitioning CT to a greener, more resilient, and more affordable grid, known as the Equitable Modern Grid Framework. Changing the nature of the regulation would not reduce the rate of return for the EDCs; they would have to direct their efforts differently and would have different performance metrics.

These PR wars tend to be one-sided. The EDCs can say whatever they want, but as noted in the HBJ article, PURA is constrained from speaking about the substance of an open motion. In an indirectly related action, the legislature last year passed a law that makes CT the third state to ban the EDCs from using ratepayer dollars to pay for lobbying expenses. According to the detailed reporting on this by the CT Mirror, utilities around the country use these funds to block climate action and pressure policymakers to let them hike up energy bills.

PURA established the following objectives for its Equitable Modern Grid Framework:

1. Support (or remove barriers to) the growth of Connecticut’s green economy;
2. Enable a cost-effective, economy-wide transition to a decarbonized future;
3. Enhance customers access to a more resilient, reliable, and secure commodity; and
4. Advance the ongoing energy affordability dialogue in the State, particularly in underserved communities.

If you would like to learn more about this effort, we recommend two resources that are easy to consume. One is an e-magazine based on a virtual “fireside chat” with PURA Chair Marissa Gillett and Representative Jonathan Steinberg that was prepared by PACE (People’s Action for Clean Energy). The other is an interview of Chair Gillett by David Roberts on his Volts podcast.

The EV Club thinks these charging incentives are important, not only to reduce the financial barriers to EV adoption, but in the service of grid resiliency. Consumers who take the incentives are required to participate in a managed charging program, which pays them up to $200 annually to charge during off-peak times. The flexibility inherent in when an EV can be charged is a benefit to the grid as peak load is reduced and the charging can help load-balance during periods of low demand. The slide at the top of the post is from the presentation given by UI at our conference demonstrating the impact of managed charging with optimization.

We are critical of the EDCs resorting to these scorched-earth tactics to further a political agenda. It will only sow confusion in the marketplace and slow EV adoption. Also, from the perspective of the EV Club, we have invested considerable time and effort to support both Eversource and UI in educating consumers and promoting the incentive. We have had them present at multiple meetings, speak at our conference, gave them feedback on the registration and implementation process, and published a considerable amount of content. It feels like an act of bad faith. Get with the program, guys!

CHEAPR Program Running Hot

The program has been setting records in terms of rebates awarded with each new month. January 2024 was a new high point with 708 rebates as seen in the chart at the top of this post.

CT saw a 47% increase in registered EVs in 2023 relative to the prior year and now a strong start to the year from the perspective of the rebate program. This comes amidst reports of a slowdown in EV sales, a first quarter miss in expected deliveries by Tesla, and a retrenchment announced by Ford and GM. The robust CHEAPR rebates and slower sales can both be true. There is the difference between local and national numbers. And CHEAPR is driven by supply as well as demand, meaning that recent EV price-cutting has enabled more vehicles to be eligible by virtue of now having an MSRP under $50,000.

The other trend in the national reporting is automakers, led by Toyota, shifting emphasis to PHEVs. That is certainly not showing up in the rebate data to this point. Of the 708 rebates in January, 640 of them were BEVs.

Still Waiting for Fleet Incentives

CHEAPR was redesigned in 2022 and there is still one component of the program that is not yet implemented, namely the incentive for fleets. Expectations were that it would go online this spring, but at the board meeting in March, no date was given.

The fleet incentive is potentially a big deal as it applies to municipalities, businesses, non-profits, and tribal entities. A fleet will be eligible for up to 10 incentives in a given year, capped at 20 total. This is only for new vehicles and the MSRP cap applies.

Not everyone will be able to obtain a fleet incentive. With the consumer part of the program running hot and the potential for a high number of fleet incentives, DEEP is prioritizing who can get them. These are the rules that have been developed. The slide was presented at a meeting in December, so never mind about that date.

The next board meeting is in June. We will publish if there is an update.

Summary of 2023 Rebates by Model

Remember, the CHEAPR MSRP cap applies to the base trim level cost of a model, i.e. options not included. This differs from the MSRP cap definition in the federal incentive which includes factory installed options. Not all trim levels of a given model will be eligible. A dealer or manufacturer offering a discount or promotional rate does not reduce the MSRP for the purposes of determining eligibility. Manufacturer repricing does. For these reasons, rebates are not an exact proxy for sales. We know, for example, that the Model Y outsells the Model 3. Also, there are two Model Y columns in the chart as CHEAPR separates the LR AWD version of the Model Y, which they don’t do for the Model 3 for some reason. Taken together, the two Tesla vehicles have almost identical rebate counts.

Since Tesla price-cutting has made more of its models/trim levels eligible, and because Tesla is efficient in letting its customers know when they qualify, the Model 3 and Model Y have dominated. Number 3 is the PHEV Toyota RAV4 Prime, number 4 is the temporarily discontinued Chevy Bolt, and rounding out the top 5 is the VW ID.4.

Program Changes are Afoot

As Advanced Clean Cars II and Advanced Clean Trucks (ACC II/ACT) failed to make it past the legislature, the Transportation Committee raised a bill, HB 5485, entitled “AN ACT CONCERNING TRANSPORTATION INFRASTRUCTURE FOR ELECTRIC VEHICLES.”

It is mostly a study bill and its stated purpose is to assess CT’s readiness for widespread EV adoption and make plans to prepare for it. The bill gives the governor the ability to declare a climate emergency but does not grant any executive authority for him to take action. The governor himself characterized it as a “nothing-burger.” Also, DEEP had already done a lot of research in preparation for ACC II/ACT. If a stronger, more holistic plan to improve EV adoption generally speaking, but especially in distressed communities comes out of it, that would be a benefit.

Arguably, it at least keeps the conversation going. The bill passed out of committee along partisan lines. The Republicans, who led the charge against ACC II/ACT, accuse it of leading to a mandate, even though that is not part of the bill. There can be changes before it comes before a vote in the full chamber. Nevertheless, it has a few specific actions and one of them has to do with redesigning CHEAPR.

The bill directs that CHEAPR be much more heavily focused on distressed communities and individuals with limited income, LMI for short. This is the language, in part: “The bill establishes a CHEAPR program goal to distribute, by January 1, 2030, at least 40% of rebate and voucher funding to a U.S. Census block group in which 30% or more of the population has an income below 200% of the federal poverty level.” A few observations.

• The bill proposes redesigning CHEAPR before the components of the 2022 design have been fully implemented.
• Inexplicably, it proposes to track overall EV adoption using CHEAPR data, rather than the more complete sales and registration data.
• The 2022 changes included the addition of Rebate+ which offers higher incentives for LMI individuals and an incentive for used EVs. These incentives haven’t gotten a lot of traction, but changes to eligibility rules and the implementation of a pre-qualification voucher have led to recent improvements in the rebate levels from almost nothing to ~5-6% of all rebates. Arguably, Rebate+ has thus far suffered from inadequate marketing.
• The current eligibility criteria for Rebate+ is participation in a government assistance program such as food stamps or free school lunch, among others, a household income that is no more than 3 times the federal poverty level, or residing in an environmental justice or distressed community. The proposed definition is different and it would exclude LMI individuals not living in the designated census block groups.
• DEEP would be given the authority to increase LMI incentive levels to an additional 200% of standard rebate levels. At current incentive levels, this would translate to $6750 for a BEV or $3750 for a PHEV should they choose the maximal level. This is in addition to any applicable federal incentive.
• Comparing this proposed new Rebate+ to the current program is not apples to apples. But it does target a similar group, and if the 40% were a hard cap and if it were applied to the program as it exists today, it would shrink it by ~85%.
• There is some additional bonding authority in the bill that could direct additional funds to the program.
• In fairness, the target date noted is 2030, and by then EVs could be less costly than ICE. So, the logic could be that the more general need for an incentive would have lessened. It is not clear what the phase-in process would be.

The full bill text is here. The “Cliff’s Notes” version is here.

Data Updated Through the End of 2023

The EV dashboard is live on the website. It has slicers and interactivity. Of course, if anyone would like information and is having difficulty finding it, please reach out to us at EVClubCT@gmail.com.

The photo at the top of the post is the top 10 EV makes (including battery electric vehicles and plug-in hybrids) as of January 2024.

This is the link to the Dashboard.

The data elements that are there include:

• EV trend
• Tend with how far we need to go
• Powertrain
• County and city
• Cities per capita
• EVs as % of vehicles by city
• Map of registered EVs
• EV by make and model
• EVs by make within city
• EV New (2023) registrations by make and model

Pro tip: The pagination is below the fold. Scroll down. Click on the page number.

The map at the top of the page depicts the EV count by city. The bubble size reflects the overall count and the pie wedges show BEV (light blue) and PHEV (dark blue).

Not all of the charts below have numbers due to the space constraints of a static screenshot. We will be publishing an updated dashboard (tbd) with full interactivity and slicers. If anyone needs a number, please reach out to the club at info@evclubct.com.

The source for the data is the DMV, but it was accessed via the Atlas EV Hub.

EVs by County

Fairfield County continues to be EV central for CT. The other counties retain the same rank as one year ago.

EV Counts by City

Below are the EV counts by city, followed by the trend for each city starting with January 2022 (5 waves of data). You will note a fairly large bar labeled “blank.” This is due to a combination of vehicles in the file having blank geo records and some others listed with zip codes that aren’t in CT. The file comes to us by zip code (now anyway, it wasn’t always the case) and so when it gets married to the city, it reverts to a “blank” label. It is, apparently, possible for the DMV to maintain a record of a vehicle garaged in the state with an out of state zip. The relatively high number for Windsor Locks, we think, represents airport rentals. The fact that it is trending slightly downward may reflect Hertz shedding EVs.

Greenwich leads with 2542 EVs. Stamford, Westport, Fairfield, and West Hartford round out the top 5 cities.

Other stats – EVs per capita and EVs as a percentage of all vehicles. We are getting to the point where EVs now make up a measurable percentage of vehicles in some municipalities.

Finally, there is make within city. It required multiple screenshots to capture all the vehicle makes in the legend if you want to decipher the colors in the bars.

A 47% year on year increase in Registrations Still Leaves Us Playing Catch Up

As we recently published, there are 44,313 registered EVs in CT. This includes BEVs, PHEVs, eMotorcycles (eMC), and Fuel Cell (FCEV). The dominant drivetrain is BEV (27,709), followed by PHEV (16,517), eMC (84), FCEV (3). The market has been moving toward BEVs.

The photo at the top of the post looks at the historical trend, the current data point, and what the slope would have to look like for CT to meet its goal of 500,000 registered EVs by 2030. The slope is plotted by calculating a compound annual growth rate from the current level to the goal over the time remaining. This is not the same thing as a forecast.

The good news is that the CAGR works out to a little over 41%, lower than the increase we saw this year. The bad news is the percentage represents a large number of vehicles in the out years. The final year is over 146,000 EVs in that year alone. And that percentage is an increase in net registrations. The corresponding increase in sales would have to be larger to account for turnover.

When the goal of 500,000 by 2030 was set, it was never made clear whether that meant January 1 or December 31. We cut ourselves some slack and used the latter, giving us 7 years to reach that number.

Policy Environment for Used Electric Vehicle Incentives

When the Inflation Reduction Act was drafted, it had multiple goals, which can be loosely summarized as promoting clean energy, reviving the domestic industrial base, and making clean tech more affordable for consumers. Related to that is the Justice40 initiative, whereby the program design devotes substantial resources to direct these benefits to environmental justice communities.

EVs are very much a part of Justice40. Not only are the jobs important, but air quality is often poor in these communities. That is certainly the case in Connecticut with our bad and getting worse air pollution. (The new State of the Air report by the American Lung Association is due out next month. Keep an eye out if you want to get depressed.)

The early adopter profile for EVs, as with many products that represent a substantial purchase, is upscale. Though certainly helpful, new vehicle incentives alone may not be enough to reach a mass market. For EVs to displace internal combustion vehicles at scale, anyone who can afford to own a car needs to be able to afford an EV. The majority of vehicle sales in any given year are used vehicles. According to the Federal Bureau of Transportation Statistics, used vehicles accounted for 71% of all vehicle sales in 2019 (the most recent available data). And so, an incentive for used cars was incorporated into the IRA. The question is how easy is it for the consumer to access it.

Inflation Reduction Act Used EV Incentive Basics

These are the basic rules for the federal used EV incentive.

• Purchase price cap of $25,000.
• Only purchases through new or used car dealers are eligible.
• The incentive is 30% of the purchase price, capped at $4000.
• Purchaser income limit of $150,000 modified adjusted gross income for joint filers, $112,500 for head of household filer, and $75,000 for single filers.
• Income eligibility can be determined by the current or prior year.
• Vehicle model year must be 2 years older than the current model year.
• Transfer provision can be used. This provision is new for 2024 and allows the buyer to transfer the credit to the seller and receive it as a point of sale rebate.
• Minimum battery pack size of 7 kWh.
• No more than one incentive per VIN. As a practical matter, this is a non-issue at this point. The incentives just haven’t been around that long.
• Dealer registration with the Department of the Treasury is required in order for the consumer to receive the incentive. There are specific registrations for both the tax credit and for the transfer.

None of the new car rules regarding domestic assembly, battery mineral sourcing and manufacturing, and foreign entities of concern apply to used vehicles.

Dealer Registration

In order for a consumer to receive the incentive (new or used), the dealer that sells the vehicle must be registered with the Department of the Treasury (IRS). Not every dealership is registered. Unfortunately, there is no publicly available list of registrants, which we regard as a big oversight on the part of Treasury. It is necessary to contact the dealership you are thinking of visiting, though some have proactively advertised their participation. Based on what we have been hearing through our conversations with the Electric Vehicle Association, about half of new car dealerships have registered and a much lower percentage of used car dealerships.

We have heard various reasons why a given dealership may not have registered:

• Dislike of the IRA.
• Not interested in selling EVs.
• Registration declined by Treasury for whatever reason, for example an incomplete application.
• Registration still in process.
• Affiliated manufacturer doesn’t make incentive-eligible EVs so why bother, or why bother just for used EVs.
• Avoidance of non-mandatory involvement with the IRS.

This blog reached out to the two largest used car chains, CarMax, which is the largest by a mile, and Carvana. In both cases, these companies are set up to provide the Time of Sale report so the customer can claim the tax credit, but neither is registered for the transfer. CarMax is at least thinking about it. In their response to our inquiry, they wrote, “…We anticipate developments on the credit transfer in the future.” If we hear about a subsequent update, we will publish it!

Tesla

As with the new vehicle incentives, Tesla is also registered to process both the tax credit and the transfer for used EVs.

Used EVs are an Underdeveloped but Important Market

Our view is that the transfer is very important for the used EV market since there will be a higher incidence of consumers unable to make use of a conventional tax credit. (These tax credits are non-refundable, meaning if you are not able to use it, you lose it, and there is no carry-forward provision.)

We do not have access to a subscription service that tracks vehicle sales. Our very back of the envelope calculation, filtering for vehicles registered in 2023 with a model year of 2021 or older indicates that roughly 5725 used EVs were sold in CT last year. So, not nothing, considering there were about 18,000 overall EV registrations occurring last year.

Private Sale Workaround?

This incentive structure with the registration was designed to work through dealers and does not apply to private sales. However, a company called KeySavvy, which has a dealership license, is offering to facilitate private transactions via its dealership status and does offer the transfer. (We do not have personal experience with them.) This is a sceengrab from their website. If any readers use them, please let us know how it goes.

State Incentive

This article mainly focuses on the IRA, but there is also a CT CHEAPR incentive for used EVs. It is part of the Rebate+ incentives that are available for households with income of no more than 3 times the federal poverty level or that are located in an Environmental Justice or Distressed Community. This is a true point of sale rebate, not a tax credit, and it gets deducted from the invoice price. It is $3,000 for a battery electric vehicle and $1125 for a plug-in hybrid. Rebate+ also offers an added incentive for new EVs and the total of the base and + incentives are $4250 (BEV) and $2250 (PHEV). To avoid a suspenseful purchase experience, consumers can register in advance and obtain a pre-qualification voucher from DEEP. Vehicle eligibility for this rebate is limited to vehicles that were eligible when new. Eligible vehicles can be found on this page of the CHEAPR website. The website also has a link to which communities are EJ/distressed.

Usual Disclaimer: As always, we seek to provide the most up to date information but things change and it is always advisable to check when shopping for a car and to check with your CPA.

CGA SB 343

The Connecticut General Assembly has raised a bill, SB 343, that proposes to “prohibit parking electric vehicles in parking garages.” This applies to residential and commercial garages. It is part of a larger bill that is about fire safety more generally, which is possibly why the committee of cognizance is the Public Safety Committee and not the Transportation Committee. Regardless, as ridiculous as this sounds, the bill has been raised. Public hearings are scheduled for March 7. There will be a vote, at least at the committee level. Hopefully, it won’t make it beyond that.

If you are interested in offering written or verbal testimony (either in-person or remotely), these are the links:

• Submit Written Testimony
•  Register to Speak

Why We Think This Provision Should Be Stricken

Electric Vehicles are sophisticated and highly regulated devices. EV fires are incredibly rare, much rarer than with internal combustion cars. Fires involving the high voltage battery are rarer still. A study in the Netherlands showed that only 38% of EV fires involved the battery.

Of the fires that do occur in EVs, usually it is due to an accident, not parking or charging. There have only been 434 EV battery fires since 2010 – in the entire world. (source: EVFiresafe).

There was a study published in 2020 by the Research Institute of Sweden that looked at whether the charging of electric vehicles in garages posed an unacceptable risk of fires.  Based on the findings from available data and a literature review, there were no indications that charging of electric cars in parking garages would result in an increased probability of fire.

A study from the National Research Council of Canada, published in 2023, reported that there has been no large fire in a parking structure that was initiated by an EV fire.

If enacted, most EV owners would have no place to park or charge their vehicles. It would take a substantial portion of the level 2 public charging infrastructure offline. It would bedevil residents of urban, suburban, and rural communities alike.

This contradicts numerous legislative and regulatory efforts in the state to promote EV adoption, including the mandate that 100% of state new vehicle purchases be electric by 2030.

If there is such fear of lithium-ion batteries, then why not take this to its logical conclusion and ban mobile phones, tablets, laptops, and other electronics that rely on this technology. We don’t because they are safe. So are EVs.

We think this is a bad faith argument and that this provision should be stricken from the bill.