CHEAPR Falls Off a Cliff

Rebates Are Down 81% Based on Early Data

CHEAPR is the Connecticut EV purchase incentive program, administered by the Connecticut Department of Energy and Environmental Protection (DEEP). As of October 15, DEEP lowered the incentive levels for all battery electric vehicles, plug-in hybrid vehicles (but not fuel-cell vehicles), as well as lowered the price cap that determines vehicle eligibility. We described these changes in detail here.

As reported in the, “DEEP representatives told the News that the incentive decreases were necessary to keep the program running.” In other words, they are worried about running out of funds. In legislation passed earlier this year, CHEAPR was funded to the level of $3 million per year through 2025.

Our concern has been that the reductions are too large and that the lower price cap would exclude, in particular, the number one selling EV (by a mile), the Tesla Model 3. The early data seem to bear this out.

DEEP publishes data with a bit of a lag, and as of this writing on Dec. 8, there was a Dec. 2 update published with data through October 31. Also, there isn’t individual day granularity; there are certain interval boundaries that we have to work with. Finally, we don’t know if purchases made before the change, but where the vehicles were delivered afterward, are grandfathered in. All that said, the pattern that emerges is so clear it is like a punch in the nose.

We were able to isolate two 13-day periods, just before and just after the change, something of a “light switch” test. These periods are 9/24 – 10/6 and 10/19 – 10/31.

The number of vehicles for which rebates were issued declined by 81% (from 119 to 23). The dollar amount of the rebates is down 90%. The number of Model 3 rebates declined from 58 to 5. If a straight-line run rate is calculated from the post-change 13-day period, the program would disburse slightly over $600,000, well below the $3 million allotted cap.

Interestingly, if we look at the past 12 months of disbursements before the change (as close as we can get, 10/11/18 to 10/6/19), the amount disbursed was $2,867,500. Are they solving a problem that doesn’t exist?

It is possible that their internal projections that led to the reductions are based on sales forecasts that aren’t supported by current trends. In the legislation that authorized the funding, there is a provision to establish rebates for used vehicles, which has not been done to date. From our perspective, this is the tail wagging the dog. Let’s make the program work. If it runs over budget, we would rather deal with a problem of success. If these changes hold, it will have undermined the intent of the legislation passed in the spring.

The data from DEEP

Dates are noted in the upper right corner.

We expect to publish a subsequent update as more data become available.

CHEAPR Changes Likely to Impact the Tesla Model 3

The Potential Impact of the Lower CHEAPR Price Cap

Looking at the implication of the changes made to the CHEAPR rebate criteria on October 15, the lower price cap seems directly targeted at excluding the Model 3. The state (and everyone concerned about emissions) seeks to accelerate EV sales, and the Model 3 has higher sales volume than all of the other EV models combined (including BEV and PHEV), according to sales data published by Inside EVs. (Other vehicles will be affected by this, mainly from BMW and Volvo, but there were few rebates for these vehicles.)

The lower trim levels of the Model 3 have been within the previous $50,000 price cap. While it is possible to buy a Model 3 for under $42,000, you are pretty much limited to the base standard range and rear-wheel drive with no options.

Since Tesla began ramping production in the latter part of 2018, the Model 3 accounts for 46% of rebates as reported on the CHEAPR stats page.

CHEAPR rebates 5/31/18 - 9/30/19
CHEAPR Rebates by Model, 5/31/18 – 9/30/19

If we restrict the range to only 2019 (almost – the range begins on 12/24/18), the numbers are more dramatic with the Model 3 accounting for 54% of rebates, six times the next highest-ranking model, the Toyota Prius Prime.

CHEAPR rebates 2019
CHEAPR rebates by model, 12/24/18 – 9/30/19

As can be seen from the filter settings on the above charts, CHEAPR stats are posted through 9/30 as of this writing. From what we have observed, the posting of the stats lags by 3-4 weeks. We don’t know if there is any lead/lag in the implementation (i.e. orders placed before 10/15 with the vehicle delivered afterward). In approximately 8 weeks, depending on the timing of future data loads, we will examine what impact the changes have had, and, over time, we’ll see if it slows overall EV adoption in CT.

A Cheaper CHEAPR

CHEAPR lowers incentives for BEVs and PHEVs, Changes MSRP Cap

After this blog put up a detailed update on CHEAPR 2 weeks ago, the date at which the replenishment of funds mandated by the legislature took effect, we have learned that incentive levels and criteria have changed as of today (Oct. 15).

The max MRSP has been lowered to $42,000 from $50,000 for PHEVs and BEVs. The max MSRP for FCEVs (fuel cell) has been raised to $60,000. This resolves the conflict created by the earlier, poorly thought out, cap in that there are virtually no FCEVs available under $50K.

Incentives for PHEVs are now $500, no matter the electric range. Previously, PHEVs with 45+ miles of electric range were eligible for $1000.

There are now 2 categories of BEV incentive, down from 3. These are 200+ miles and <200 miles. They are eligible for $1500 and $500, respectively. The old categories were 200+ ($2000), 120 – 199 miles ($1500), and <120 miles ($500).

The incentive for FCEV remains at $5000 irrespective of range (and the range across these vehicles varies quite a lot).

CHEAPR Replenishment


Connecticut Hydrogen and Electric Automobile Purchase Rebate, in case you were wondering, is what the acronym stands for. CHEAPR has been with us for a while now. It was passed in 2015 and has handed out 5267 rebates (through August 31), totaling over $10 million for the purchase of fuel-efficient EVs. (There were 10,797 EVs registered in the state as of July 1, so it sure seems like it has been a factor.)

If you go on the program’s website today (Oct. 1), it indicates that there is only $60,958 in remaining funds. But HB 7205, passed in the 2019 legislative session, authorizes a replenishment due to take effect today, which will hopefully be reflected soon, and which funds the program through 2025.

Keep in mind, CHEAPR is a rebate. It is not a tax-credit like the Federal incentive, and there are no manufacturer sales caps. The rebate is more consumer-friendly in our view.

Current Incentive Levels

CHEAPR standards have changed over time. The basic idea of the rebate size being driven by zero-emissions range is still present, but as cars have changed, so have the criteria. This is the current incentive breakdown:

CT EV purchase incentives

As the chart indicates, incentives are available for plug-in hybrid vehicles (PHEV), battery electric vehicles (BEV), and fuel-cell electric vehicles (FCEV). The implication is that FCEVs have much greater range than a BEV. That isn’t entirely the case. A Tesla Model 3 has up to a 310-mile range, Chevy Bolt gets 238 miles, Hyundai Kona is rated at 258. There are two FCEVs currently registered in the state. Both are Toyota Mirais, rated 312 miles. The other two FCEVs that we are aware of are the Hyundai Tucson (265 miles), and the FCEV version of the Honda Clarity (366 miles). There were no rebates given for either of the FCEVs.  (It is also hard to find one within the price cap.) We’re not entirely sure about the consistency here, but range is the stated principle.

The amount of incentive given for a lease may not be as straightforward as it gets folded into the mathematics of the lease payment calculation by the dealer. As the saying goes, your mileage may vary.

Many CT dealers are interconnected with the DMV/CHEAPR and will handle the paperwork. They often just take the incentive off the price of the vehicle they deliver. It saves the work of filing for the rebate, but we recommend carefully reviewing the invoice with the dealer in order to accurately set expectations regarding the price.

Price Cap

There are other requirements associated with CHEAPR. Eligible vehicles must have an MSRP below $50,000. (Originally, the cap was set at $60,000.) This makes ineligible a number of expensive EV entrants such as the Tesla Models S and X, Jaguar i-Pace, Audi e-Tron, and others. The Tesla Model 3 is eligible for the lower trim levels. It is possible to get the long-range (310-mile) Model 3 for under $50,000. We expect there to be trim levels of the forthcoming Model Y that will also be eligible, based upon what we see on the Tesla website. With respect to the FCEVs, the Honda Clarity base trim price is $59,365, Toyota Mirai is $59,430, Hyundai Tucson – $50,875 (FCEV base prices are from Car and Driver). Based on these MSRPs, it would appear they would all be too expensive to qualify, but they are listed as eligible on the CHEAPR website. We are only aware of the availability of these vehicles via lease. If you’re going that route, it seems prudent to verify the eligibility before concluding the transaction.

Once Only

Unlike the Federal tax credit, which is associated with each vehicle, the CHEAPR rebate is tied to the person receiving it. This rebate can be claimed one time only. It can be used for multiple vehicles if different (licensed) members of the household are the registrant. Pro-tip: Don’t co-sign for a vehicle because you will both get dinged for the use of the rebate.

Where Can You Buy It

In order to be eligible, it is required that the vehicle be purchased from a dealer doing business in CT. (The dealer gets a little taste, too.) If you buy that Chevy Bolt from a dealer out of state and transfer the registration, you will not get the rebate.  The exception to this is Tesla, which does not have dealers, and which has been barred by CT law from opening stores in the state. But the Model 3 trim levels that are below the price cap are eligible and Tesla will work with you on the admin.

New vs Used

This incentive applies to the purchase or lease of a new vehicle only. There is language in HB 7205 (line 142) authorizing DEEP to set income and incentive thresholds for purchases of used vehicles. We contacted DEEP for clarification and were advised that the rules as stated on their website are what govern eligibility, and these rules state, specifically, new vehicles only.

This is the link to the CHEAPR website. It lists all of the eligible vehicles as well as the rules and program stats.



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

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

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

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

Charging Infrastructure

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

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

Still No Direct Sales Bill

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

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

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

Model 3

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

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

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