The chart at the top of the post shows the number of rebates and amount of funds awarded monthly through August 2024. The reason for the dip in August is that there is only partial-month reporting available at this time.

This information is based on recent the CHEAPR board meeting.

CHEAPR Program Running Hot

As can be seen in the chart, the CT EV purchase incentive program has been running hot over the past 16 or so months. Between price cuts on the Tesla Models 3 and Y, along with new models being introduced by the legacy manufacturers, CHEAPR has dispensed $7.9 million worth of rebates this calendar year through July 30 with another $600 thousand in the processing pipeline. Last year, $8.9 million was dispensed in total and this year will clearly exceed that. Fortunately, there have been carryover funds from past under-performance, but those will be burned through by next year.

Cuts Looming

The Department of Energy and Environmental Protection has budgeted $9.2 million annually for incentive payments. Incentive payouts follow consumer demand and rebate levels, and 87% of the expenditures have been going to the Battery Electric Vehicle (BEV) standard incentive. The remainder is divided amongst PHEV rebates, along with supplemental rebates and used EV rebates for income limited individuals. A cut to the size of the standard rebate for BEVs will be used to slow the burn rate. While final action has not yet been taken, it is expected that the $2250 standard BEV rebate will be rolled back to $1500 as of January 1. Based on the first quarter run-rate, a further cut to $1000 is possible for July.

EVs are currently in over-supply and discounts are widely available. It might make sense to take advantage of the full rebate while it is still here.

Increases for Plus Rebates

If cuts are made to the standard rebate, the tentative plan is to increase the size of the plus rebates. These rebates are for people who have a household income of no more than 3 times the federal poverty rate, or are enrolled in a qualifying state or federal government assistance program, such as food stamps or free school lunches, or live in an environmental justice community or distressed municipality. (This is the page that details these criteria.) For a new BEV, the Plus incentive would increase to $3000 from $2000, for a total incentive of $4500, assuming the standard incentive is rolled back to $1500. There would be increases in the PHEV incentive, and used BEV/PHEV incentives as well.

Increasing the Plus rebates will not break the bank as there are relatively few of them.

The legislature authorized increasing the size of the Plus rebates to up to 200% of the standard rebate level, which is what this would be if the standard rebate were to be cut to $1500. It is not clear to us how the Plus incentive could be further increased without exceeding the 200% threshold.

The same legislation called for a program goal to dispense 40% of the funding to EJ/distressed communities by 2030. Currently, the closest proxy we have to that number, the Plus rebates, sits at about 6%, looking at the data since the end of June. That is a lot higher than it used to be, but nowhere near 40%. Clearly, a direction has been set for the program and we should expect to see changes between now and then.

One of the changes that has driven higher participation in the Plus rebate process is the option of a pre-qualification voucher. That way, the buyer knows they’re approved before the purchase, and the incentive can come off the invoice price (as opposed to a post-purchase reimbursement which is what it was initially).

Will The Marketplace Change In A Way That Affects This?

Much of the non-Tesla part of the manufacturing side of the industry has announced pullbacks in their BEV expansion plans and a revived emphasis on plug-in hybrids. The numbers in the CHEAPR program aren’t showing this to this point, though there is a lagging effect in terms of announcements relative to consumer adoption. The point is that if PHEVs gain market share, it will slow the burn rate. Unlike in the Inflation Reduction Act, PHEV incentives in CHEAPR are much lower than BEV incentives, $750 vs $2250 at current rates.

Fleet Incentive Postponement

A major program enhancement passed in the 2021 legislation and codified in Public Act 22-25 is the implementation of a very inclusive incentive for fleets – commercial, non-profit, municipal, and tribal. There had been $2 million budgeted for this in 2024, but the program is still in the design phase and will not launch this year. As indicated by the $2 million (which is not necessarily the number going forward), this is a finite resource. Equity will be prioritized for fleets, but it is not the only consideration. The tentative rubric that was developed for prioritizing the submissions is described in this earlier blog post from the time of the legislative session.

Rebates by Make/Model

This is the number of rebates by make/model for available Q3 data. Keep in mind that qualifying vehicles must have a base trim-level MSRP of no more than $50,000. (This is different than the Inflation Reduction Act federal incentive MSRP definition, where the price cap includes factory-installed options.)

NorthEast Electric Vehicle Symposium Set for September 15th and 16th

We thank our Gold Sponsor: BMW

Sunday – EV Test Drives

Sunday will feature test drives with 10 EV models:

• BMW i4, i5, iX
• Tesla Cybertruck
• Rivian R1T, R1S
• Alfa Romeo Tonale
• Kia EV6, EV9, Niro

Sunday – EV Showcase

There will be a showcase with approximately 50 vehicles. These include many late-model EVs, such as a BMW i7 and a Tesla Model X, an electric garbage truck used by the City of New Haven, and 2 electric police patrol cars from Westport.

Sunday – “Sage on a Stage” Short Presentations

We will be using the bed of an electric pickup truck as our stage! Here is the agenda.

Monday Policy Symposium

• 9:00 – New Haven Mayor Justin Eliker welcomes attendees
• 9:15 – Rep. Jonathan Steinberg introduces Marissa Gillett
• 9:25 – Marissa Gillett, Chair, Public Utilities Regulatory Authority discussing transportation electrification and the equitable modern grid
• 10:15 –  Claire Coleman, CT Office of Consumer Counsel
• 10:45 – Break
• 11:00 – Moderator Matt Ferrell of the YouTube Undecided Channel leads a panel discussion of people from a municipality, condo association, commercial enterprise, and an installation contractor, who describe their experiences navigating incentives, wrangling the utilities, and other challenges. This is a ground-truth level look at the intersection of policy and lived experience.
• 12:00 Lunch
• 1:00 – Brandon Smith of EVNoire discusses how workplace charging promotes fair access to EVs.
• 1:45 – Daphne Dixon of Live Green CT discusses Model EV Zoning Regulations that have been developed in concert with the federal Department of Energy.

This is a free event. The location is the Hotel Marcel in New Haven. Free registration is here.

post by Barry Kresch

CT Roundtable for Climate and Jobs Panel

The CT Roundtable for Climate and Jobs recently hosted a virtual event entitled “Transportation Infrastructure and Electric Vehicles in Connecticut.” I was one of two panelists, along with Jay Stange of Transport Hartford and the Center for Latino Progress.

In some ways, we were an odd pairing, since Jay’s transportation concerns are more about biking, walking, transit, and multi-modal transport. He is a lot more focused on e-bikes than EVs.

But maybe we are not such a mismatch. In many respects, we share similar views. The EV Club supports actions that reduce greenhouse gas emissions along with pollutants such as nitrogen oxides and particulate matter.  There is a need for affordable transit, not to mention our roads are undeniably choked with traffic. Some not specifically EV positions the club supports:

• Investment in mass transit and last-mile transport.
• Support for clean micro-mobility, such as e-bikes.
• Disappointment at the loss of free bus fare.
• Support for active transit – hike and bike trails, protected bike lanes on city streets.
• Reversal of the destruction of neighborhoods and the fabric of urban life due to the heedless way interstate highways were built.

That said, I hope he and other representatives of “Environmental Justice” (EJ) communities come to value the importance of accelerating EV adoption for the financial benefits accruing to EV owners, the health benefits of zero-emission vehicles, and the economic activity that the EV industry is creating. It would be unfortunate if this constituency were left behind.

The Value of EVs in EJ Communities

According to this paper by the University of Michigan, “More than 90% of vehicle-owning households in the United States would see a reduction in the percentage of income spent on transportation energy—the gasoline or electricity that powers their cars, SUVs and pickups—if they switched to electric vehicles.”

EV adoption improves air quality, and this improvement is especially beneficial to the EJ communities that sit at the nexus of our major highways, and which suffer disproportionately from asthma and other cardio-pulmonary conditions. Adoption by those living in the community and those who simply drive through the community are both needed.

There was a failed attempt late last year and again during this year’s legislative session for CT to adopt the second phase of the California emissions standards, known as Advanced Clean Cars II, that were designed to accelerate EV adoption. According to an analysis by the American Lung Association, the proposed ACC II standards would have yielded

• $11.5 billion in monetized health benefits
• avoided 1060 premature deaths
• avoided 22,900 asthma attacks
• avoided 120,000 lost workdays.

It has been a challenge politically to get EJ communities more involved in advocating for EVs, even though the transportation sector is by far the largest emitter. As advocates were wrangling support for ACC II during the legislative session, the lack of enthusiasm in the EJ community was palpable. The Black and Puerto Rican Caucus in the legislature largely stayed non-committal, or at least felt that they had other, more urgent priorities. In the face of unified Republican opposition, the Democrats were not able to maintain enough of their majority to pass it on their own.

The arguments we hear in opposition to advocating for higher rates of EV adoption are mostly that EVs are too expensive and there are not enough places for people who do not have a private garage to charge. The first argument is diminishing faster than many realize. The second is still a challenge but certainly a solvable one.

EV Prices Are Coming Down

EV prices are coming down due to a mix of lower battery costs and vehicle oversupply. The oversupply may not last forever, but the trend will continue as battery technology continues to improve and production gets scaled. Sometimes the lower price comes in the form of a discount, even though the MSRP hasn’t been changed. In addition, there are federal and state incentives that apply to a purchase or lease, as well as incentives for used vehicles. The federal and state incentives are stackable.

Let’s look at one example, the new Equinox from Chevrolet. The base trim level begins at $33,600. It is eligible for a $7500 federal incentive as well as a $4250 CHEAPR incentive from CT for EJ community residents. Given new authority from the legislature, the $4250 may increase to as much $6750. If that does happen, the cost would fall below $20,000. This is for a new car. There are incentives for used EVs as well, in the amount of up to $4000 (federal) and up to $3000 (state). As always with incentives, rules apply. See the EV Club incentives page for a guide.

Access to Charging

The second barrier, access to charging, is real, though it can be solved and there are lots of examples of how technology and policy can move this along.

This is primarily a level 2 charging problem, meaning that the need is for an adequate supply of 240-volt AC chargers. These chargers need to be situated in places where vehicles have a reasonable amount of dwell time to charge while they are parked. Level 2 charging is much less expensive and less of a stress on the grid than DC fast chargers.

• New multifamily buildings that have parking should be required to install EV spaces.
• New and existing apartments or condos can take advantage of generous incentives to install chargers. In EJ communities, there are adders that could enable most or even all of the cost to be covered.
• Chargers can be popped into streetlamps. There are some pilots in this country, but this is already in use in parts of Europe. It involves rewiring the streetlamp. If the lamp bulb is swapped out for an LED, then there is enough power to spare for the EV charger. Aside from streetlamps, there are other curbside options available.
• Banks of chargers can be situated in public parking areas.
• The Federal Department of Energy has an initiative promoting workplace charging for residents of these communities. The Club has booked a presenter from EVNoire for our conference in September who will discuss this.
• There are efforts to electrify “distributed fleets” (e.g. Uber and Lyft). The New York City Taxi and Limousine Commission is requiring these fleets to be electrified as a condition of licensure. There is a program in California called the Clean Miles Standard Program that aims, using incentives and mandates, to have 90% of these fleets be electric by 2030. Many of these drivers live in working class communities. It will help speed acceptance of EVs. This may require at least supplemental use of DC Fast chargers as some of these vehicles spend a large part of the day in service.

EV adoption by municipal fleets is a great lead by example opportunity. At our conference in September, we will have an electric school bus and electric garbage truck, both from the City of New Haven. There will also be an electric police patrol car from the Town of Westport.

Finally, just building chargers isn’t enough. Nothing works without an investment in public education and outreach.

We thank the CT Roundtable for Climate and Jobs for hosting this event and discussing this important topic. Click here to find the recording of this event.

Post by Barry Kresch

The Utilities and PURA Have Worked Out Their Differences

I spoke today to United Illuminating and they advise that they and the Public Utilities Regulatory Commission have come to a meeting of the minds. The EV charging incentives are back and here to stay, that this is not merely a “suspension of the suspension.”

The incentive program is the same for both Eversource and UI, except for some minor differences in approved chargers and telematics vehicles due to the companies using different third-party program implementers. Eversource advises that they ended up not pausing the incentives.

Eversource further advises that these are the current status in terms of funds availability in the different parts of the program. (We don’t have status from UI.)

• Most business level 2 verticals are filled except for Workplace. They are putting new applicants on a waitlist.
• Level 2 residential is still available.
• DCFC applications are being accepted through September 1.

UI’s claim is that the dispute centered around timely reimbursement. The program is a pass-through. They get reimbursed for the funds outlay and carrying charges, but do not make a profit on this. Delays in the reimbursement may cause them to delay other investments or potentially impact their cost of capital.

We don’t feel in a position to critically evaluate their assertions vis a vis PURA, but that is what we heard today. Regardless, it is good news that the dispute is behind us.

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!

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.

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.

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.

Fisker Ocean pictured above

Transfer Provision Details

The transfer provision is now in place for the federal incentive. This allows the buyer to transfer the tax credit to the seller and take the incentive as, in effect, a point of sale rebate, even if it technically still is a tax credit. Consumers still have the option to take the tax credit the old-fashioned way if they so choose.

The benefit of the transfer provision is the point of sale immediacy, but also the fact that a consumer does not need to have tax liability in order to utilize the credit. (The tax credit is non-refundable and has no carry-forward provision.) Another benefit of the transfer provision is that if you are financing the vehicle, it lowers the amount of interest paid because you are financing a smaller amount. The incentive does not lower the sales tax.

Dealer Registration

A dealership has to register at a portal created by the Treasury Department. This portal captures the transactions, the associated VINs, and enables the process whereby the Treasury issues reimbursement for the incentive to the seller and verifies the transaction at tax filing time. This applies to both new and used EVs. It also applies regardless of whether you are taking the transfer or the standard tax credit. In other words, if you are counting on the incentive, don’t waste your time speaking with an unregistered dealer.

According to Treasury press releases, about 50% of new car dealers have registered. This could still increase over time. Sellers of vehicles that are not eligible may not have a reason to register at present, though they would still need to if they sell used EVs. Not every dealer who registers gets approved, though we don’t have detail as to why that would be. Buyers of a vehicle from an unregistered dealer only get the standard tax credit.

Only a very small percentage of the 150,000 used car dealers have registered. Big sellers like Carmax and Carvana have not registered. Nor has Hertz which has been selling a large number of used Teslas.

There is no master list from Treasury delineating which dealerships have registered. This is very disappointing. The only option for consumers is to directly ask the dealership. (Some dealerships are advertising their registration.) We recommend making sure a dealer is registered before going there to shop if you are thinking about using the transfer.

The dealer issues a seller’s report for the transfer. You must get this before the car leaves the lot. If you do not, the only option available to you is the standard tax credit.

VIN Verification

Final determination of vehicle eligibility cannot be made until a VIN is available. Hopefully, dealers will be supported by their affiliated manufacturers and be able to accurately represent the status of a vehicle, including build to order.

Used EVs

A reminder, incentive-eligible used EVs must be at least two years older than the current model year and have not previously had an incentive associated with the VIN. Almost no used EVs have received an incentive, so for the time being the prior incentive consideration is largely beside the point. The income limits (see below) are half what they are for new EVs and the negotiated price must not exceed $25,000. Used EVs are eligible for the transfer provision. Hopefully, more used car dealers will register. In the near term, the transfer is more likely to be available from a new car dealer that also sells used EVs.

Battery Rules Lead to a Reduction in Eligible Vehicles

The new rules for 2024 are in effect, specifically higher thresholds for battery critical minerals, battery assembly, and the implementation of the first half of the foreign entity of concern (FEoC) rule. For the FEoC, no battery component assembly can take place in China as of this year.

A car must certified by the manufacturer that it meets the requirements and must appear on the EPA list at FuelEconomy.gov to be incentive-eligible.

It is not a surprise that the number of incentive-eligible vehicles has decreased. We expect a gradual recovery going forward as more North American assembly and battery plants come online, and more critical minerals come from eligible sources.

Income/MSRP Cap

The non-battery-related provisions of the incentive rules remain in place.

The income limit is $300K/$225K/$150K for joint/head of household/individual filers respectively. This refers to modified adjusted gross income. You can fulfill this requirement with either your current or prior year income. There is one exception to this, which is if you get married during the year you bought the vehicle and the income of your new spouse put you over the limit, you would not be disqualified.

The federal incentive has an MSRP cap of $55K for sedans and $80K for an SUV. The definition of MSRP includes factory-installed options but not software.

Discounting

We have been seeing reports that several manufacturers, and we have specifically seen reports of GM, Ford, and Hyundai, discounting vehicles to partially or fully compensate for the lack of an incentive. This is an example from GM Authority. Discounting is even better than an incentive because it lowers the sales tax.

Leasing

None of this changes the fact that these rules don’t affect leases. The finance company that holds the lease receives the incentive and it is not subject to battery, assembly or any other rules. The lessor is not required to pass the incentive to the consumer. And leasing costs tend to be opaque due to the different factors that determine them. That places a greater burden on the consumer to obtain the specifics of if/how the incentive is incorporated into the monthly rate. All of that said, however, EV leasing has shot up rapidly, as can be seen in this chart from The Peterson Institute for International Economics, using data from Edmonds. The biggest increases are from non-North American brands, so apparently, the incentive is getting passed along.