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.

Above chart is the monthly rebate trend through November 29, 2023. Recent months tend to get restated higher in subsequent updates.

LMI Program Focus

The CHEAPR program has always had a focus on making an EV more affordable for those who otherwise might find the purchase price too high a barrier. There is an MSRP cap to avoid subsidizing the most expensive vehicles. (Until the recent Tesla price-cutting, Teslas were mostly not eligible.) The program also offers consumers with limited income an extra subsidy, as well as a used EV incentive. The standard for doing so was loosened somewhat in 2023 and now applies to households with an income of no more than 3 times the federal poverty level. This translates to $43,740 for a single person or $90,000 for a family of 4. (These numbers get adjusted every year.)

This revised incentive, often referred to as “LMI” for lower-middle income, also offers a “pre-qualification” voucher. Qualified purchasers obtain the voucher ahead of time, and the amount of the voucher can then be deducted from the price of the vehicle at the time of the sale. Even though it’s more complicated to administer, it represents an improvement for the consumer. Buyers now know ahead of time that they are approved for the rebate and no longer have to front the cash as they did with the earlier program design.

This revised program soft-launched in March of this year. Due to the one-year shelf-life of the voucher, it was expected that there would be a lagging effect. DEEP has reported high interest in the voucher, though specific data are not reported. We can only see the reporting based on redemption. There has definitely been an increase in recent months. We hope they will be higher as more vouchers are in circulation. The chart below tracks the monthly redemptions for 2023 through November. It is likely that November will be restated higher with the next release.

Overall Rebate Volume Slackens But Is Likely to Recover

This is shown in the chart at the top of the post. We believe that this had to do with the base trim level Model Y having been temporarily withdrawn from sale by Tesla as it redesigned the vehicle, and perhaps augmented by the Chevy Bolt’s increasing scarcity as the model sunsets for the time being. The standard range Model Y is back now with an LFP battery, rear-wheel drive configuration for $43,990 (at least today), well under the CHEAPR MSRP cap. The Model Y AWD long range is also under the cap at $48,990. We expect rebate volume to pick up again. CHEAPR has dispensed about $6.8 million year-to-date and is on pace to reach $8 million. This is quadruple what it was in 2022 and is due to greater model availability and the increase in the MSRP cap to $50,000.

Models

The most rebated vehicle this year is the Tesla Model 3 with 927 rebates, followed by the Model Y with 681. These are followed by the Toyota RAV4 Prime (380), Chevy Bolt (274), Volkswagen ID.4 (204), and Hyundai Ioniq 5 (116). All other models were <100.

Fleet Rebates Coming

The final program component included in the 2022 legislation is the rebate program for fleets. It is expected to launch sometime this spring. These apply to commercial, municipal, tribal, and non-profit entities – in other words just about all fleets. Fleets are eligible for up to 10 rebates in a calendar year and 20 total.

There is potentially significant demand for these rebates. Given that potential, and the program having a pretty high burn rate generally, not every applicant will necessarily be granted a rebate. Below is a slide from DEEP indicating how they are prioritizing rebate requests. Please note, the final contours of the program are still being developed.

The reason for these gating criteria is to avoid a lapse in available funds that would cause the program to be paused, like what happened in New Jersey. The rebate size and MSRP cap are the same as with the consumer rebates.

Rebates will be pre-certified (and the funds reserved) with post-purchase repayment.

Photo above – JuiceBox Home EV Charger

EV Club member, Vincent Giordano, has utilized the Eversource incentives to buy a level 2 home EV charger and participate in the incentive to charge off-peak. In the 2-part post below, also published in the Ridgefield Press, he describes his experience and how the incentive worked for him. Vincent is a member of the Ridgefield Action Committee for the Environment (RACE).

The process whereby consumers have been accessing these incentives has not always been without hurdles, but we have been receiving reports from consumers that the utilities have been responsive in addressing issues. The club has a description of the program on its incentives page. The incentives he describes from Eversource are also available, with some small differences, from United Illuminating. So, take it away, Vincent…

Level 2 Home Charger

If you have an electric vehicle (EV) or are thinking about buying one, Eversource will help you pay for an electrical upgrade, a networked level 2 EV charger, and for charging the EV. Hard to believe – but it is true. Eversource currently has a program to rebate up to $500 for a wiring upgrade to 240 volts for your EV charger, another $500 for purchasing a network-ed level 2 EV charger, and up to $300 per year if you sign up for the advanced managed charging program.

Why is Eversource offering these incentives? It is because they realize the huge impact EVs are going to have on the grid and the importance of managing the demand for power. According to CT DMV data, Ridgefield residents own more than 515 EVs and there are more than 30,000 registered EVs in CT. Having networked EVs allows Eversource to minimize EV charging when the grid is under pressure. In the future, with bidirectional charging, Eversource will also be positioned to buy power back from EVs.

I didn’t need to upgrade my electric wiring so I passed on the wiring rebate. However, since I ran over my charger cord with the snow blower this past winter, a new and improved EV charger was intriguing. In April I purchased one of the Eversource approved EV chargers, a JuiceBox. Then I attempted to apply for my $500 rebate and to register for the advanced managed charging program. I would like to be able to report a seamless rebate and registration process. But in truth, it was more convoluted and difficult than it had to be. Thankfully, each time I ended up in some administrative trap or do-loop, the Eversource EV team came to my rescue.

This week, I received a $500 rebate check, and in October I should be receiving a gift card with the managed charging payment. The demand response season is June – September. If you are interested in these rebates, a good starting point is the Eversource FAQs for the managed charging program.

With CT’s grid 90 percent renewable energy by 2030, transitioning from fossil fuels to CT’s grid will help to save the planet and reduce US reliance on dictators with huge oil reserves and territorial ambitions.

December Update and Managed Charging

I just received a $95 check from Eversource for charging my Chevy Volt for 5 months (May to September).  During those months I used 693.43 kWh of electricity to charge my car.  At 10.45 cents per kWh, my cost was $72.46.  So the $95 check more than covered my outlay.  And now that I understand the programs better, I could have earned even more.

In an earlier article, I explained the fantastic Eversource rebate program for electric chargers and any needed electrical upgrade.  In this article, I share my experience with Eversource’s charging programs.  There are more than 600 electric vehicles registered to Ridgefielders and just 90 of us are enrolled in Eversource’s charging programs.

Our family has a 2016 Chevy Volt plug in hybrid.  It is our day to day; go-to vehicle.   Other than in the coldest months, the Volt has a 60-mile range which easily meets all our local travel needs.  We go about our business and charge at home.  Starting each day with a full charge.   When I read that Eversource would pay up to $300 per year to charge our car, I decided to give their programs a try.

There are two programs.  A baseline and advanced charging program.  The baseline program rewards participants who shift at least 80% of their charging to off-peak periods.  Off-peak charging is charging outside of the hours of 3 pm to 9 pm on weekdays.  If, in a given month, you manage to charge 80% or more during the off-peak period, you earn a $10 incentive for that month.  That’s a potential earnings of $120 annually.   There is an additional incentive for participating in optional Demand Response (DR) Events. These events can happen between June and September and only occur on non-holiday weekdays.  You must participate in all optional DR events in a given month in order to receive the $20 incentive during DR Season.  Full participation in all four months of the DR Season, and you earn an additional $80.   The baseline tier incentives are capped at $200 per year.

The advanced charging program gives Eversource more control over your charger.  You are rewarded for partnering with them to coordinate your charging.  You are required to create a charging schedule and to do your best to not override this schedule.  You specify how much of a charge you would like and by when (e.g. 100% charge by 8 am).    The charging schedule is created at the time you enroll via energy hub.  Hang onto that email if you want to change your schedule in the future.  Participation in the advance program pays the participant $25 per month, capped at $300 per year

So how did I earn $95.  It turns out that I just missed the off-peak goal in May (76% vs. the 80% goal).  In June, I missed the goal again (66% vs. 80% goal), but I didn’t opt out of any DR events in June so I earned $20.  In July, I joined the Advanced Program and earned the advanced Tier incentives for July, August, and September ($25/month = $75). Thus a total of $95.  For our charging habits, the advanced charging program seems to be just fine.

Photo above – Mohegan Sun President Jeff Hamilton cuts the ribbon in front of the Tesla store

Tesla Store Opens on Tribal Land

It has been a long time coming. Finally, Connecticut consumers have a place to go to buy a Tesla and, importantly, take delivery without leaving the state. The new Tesla store at Mohegan Sun is open for business and delivered its first vehicles today. This will help alleviate the crush many of us have experienced at the Mt. Kisco, NY delivery center that we have been forced to go to in order to get our vehicles. It also simplifies the registration process – no more temporary plates.

All deliveries for CT will be at Mohegan Sun. It is a longer distance for residents of the western portion of CT than MK.

The center will have a sales staff and offer test drives, aside from making deliveries.

Federally recognized tribes have sovereignty and the state franchise laws do not apply. These laws have thus far prevented Tesla and other EV manufacturers (Rivian, Lucid, and Fisker with more on the horizon) using the direct sales model from opening stores in CT. The tribe makes its own laws.

The Tesla store will be open 7 days a week.

Tesla has a service and leasing center in Milford, CT. Consumers are able to take test drives there as well.

Who Didn’t Show? Elected officials.

Several elected officials, including the governor, were invited to the ribbon cutting. None came. Like Tesla opening a CT store, this is another historic first. Since when do pols not show up for a ribbon cutting? (Governor Lamont did issue a statement that called the center good news for consumers.) This illustrates how divisive the direct sales issue is – in Hartford. Among consumers, the issue polls 80 – 90% favorable.

75 Destination Chargers, Going to 100+

Mohegan Sun reports that sustainability initiatives are a major part of its commitment to economic growth, tourism and community support. Jeff Hamilton, GM of Mohegan Sun, who described sustainability as part of the tribal cultural heritage, announced that its collaboration with Tesla includes the installation of Tesla destination chargers, which will be in all 3 parking garages and number 75 in total when the installation is complete in the late summer of 2024. Future plans call for an expansion to over 100.

A Big Day But Only A First Step

Lori Brown of CTLCV                 Zach Kahn of Tesla

Lori Brown, the Executive Director of the Connecticut League of Conservation Voters, noted that today’s event is a win for the environment but that given the climate crisis, we cannot act fast enough. Speaking of direct sales, she noted that “we need to adopt and harmonize laws to get there.”

Zach Kahn, Tesla Senior Policy Manager, East Region, noted the importance of how this facility contributes to sustainable development in eastern Connecticut. He also noted that the state is not nearly on pace to meet its stated goal for EV adoption. (The EV Club agrees with him on this point. The state’s target is for 500,000 registered EVs by 2030 and we only have 36,269 now.)

Tesla and Mohegan Sun also noted their tribal workforce development initiative with Tesla jobs in the offing, an important, if sometimes overlooked, benefit.

EV Club in front of the new Tesla Store. From left to right – Paul Braren, Will Cross, Phil Levieff, Bruce Becker, Barry Kresch, Demetrios Spantidos, and Lori Brown of CTLCV

It was a good day! The EV Club was glad to be a part of it.

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

Northeast Electrical Vehicle Symposium

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

PACE

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

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

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

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

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

First Responders

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

Incentives

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

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

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

EV Showcases

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

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

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

Speaking Engagements and Tabling

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

Zoom Meeting Presentations

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

Policy/News

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

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

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

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

Data

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

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

Videos!

Find them on our YouTube channel

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

Global Temperature Rise is Already 1.2 degrees Celsius above baseline

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

Transportation Is Low Hanging Fruit

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

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

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

Advanced Clean Car Regulations II

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

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

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

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

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

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

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

It’s Not Over

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

Freedom!

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

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

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

Grid

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

Charging Infrastructure

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

EV Costs

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

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

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

Flexibility

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

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

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

You Can Help

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

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

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

Policy Matters

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

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

IRA Incentive Update – Transfer Provision Goes Into Effect in January

A Tax Credit Becomes a Point of Sale Rebate

The transfer provision of the federal IRA EV incentive is scheduled to go into effect in January. This provision meaningfully improves upon a tax credit:

• The incentive becomes a point of purchase rebate.
• It can be used by people even if they don’t have the tax liability to be able to use a tax credit.

The IRS published a draft of its rulemaking on October 6 and plans to issue final rules shortly. Much of the rulemaking has to do with implementation details. This is a summary:

• The IRS will be launching a new website called IRS Energy Credits Online and dealers must register with this site to participate. Consumers can only obtain the incentive from a registered dealer.
• Participating dealers will use the site to verify a vehicle’s incentive eligibility, register the sale, and indicate whether (or not) the buyer elected the transfer option.
• For buyers choosing to transfer the credit to the seller, the dealer must reduce the invoice amount by the full amount of the available incentive.
• Dealers must provide written documentation to the customer regarding the vehicle’s incentive eligibility.
• Once the sale is registered, the IRS will issue payment to the dealer within 72 hours. (When the transfer was initially announced, dealers were concerned about the potential to incur significant carrying charges.)
• Dealers get repaid whether or not they have tax liability to absorb a tax credit.
• Consumers must attest in writing that they are eligible for the incentive. This mainly applies to the income caps. A buyer must fall within the caps for either the year they make the purchase or the prior year. If that turns out not to be the case, the consumer must repay the incentive to the IRS.
• Incentive payments do not count as income for either the dealer or the consumer.

This is a link to the IRS press release.

New Webinars Announced for Program Updates

The incentive program from the Public Utilities Regulatory Authority (PURA) that is administered through the state’s two largest utilities, Eversource and United Illuminating gets evaluated every year. Since the program has started, there have been some modifications introduced at the beginning of each year.

Eversource and UI have announced webinars to explain the changes for 2024. The webinar for residential is on Wednesday, Oct. 25th, and for commercial, it is Monday, Oct. 30th. Registration links below.

• EV charging programs for single family homes
  • Wednesday, October 25^th from 1:00 – 2:00 p.m.
  • Register here

• EV charging programs for business, communities and large multifamily residences
  • Monday, October 30^th from 1:00 – 2:00 p.m.
  • Register today

The residential program offers an incentive of up to $500 toward the purchase of a 240 volt charging station and up to $500 toward offsetting the installation cost involved in bringing a 240 volt line from the panel to the garage. There is also a managed charging component, which pays consumers for allowing the utility to throttle charging during peak demand periods. If one takes the incentive for the hardware, participation in the managed charging is mandatory. It is most likely that any upcoming changes will have to do with the managed charging component of the program. It is possible there will be some new approved equipment.