New Program Rules Adopted by CHEAPR Board

Higher Incentive Levels, Low MSRP Cap, New Income-Limited Incentives

An updated set of rules was adopted by a 6-3 vote of the CHEAPR board that supersedes the last rule change made in October 2019. Here are the most relevant changes:

BEV = Battery Electric Vehicle, PHEV = Plug-in Hybrid Electric Vehicle, MSRP = retail price

Major Changes

  • No difference in incentive levels based upon EV range.
  • Higher incentive levels for the remainder of 2021.
  • New income-limited incentive for used EVs
  • New income limited supplemental incentive for new EVs
  • Likely effective date is on or about April 1.

There is no longer a difference in the size of the incentive as it relates to the range of any given BEV. Incentives are higher across the board. The MSRP cap was left unchanged at $42,000. There are new income-limited incentives for used EVs and a supplemental incentive for new EVs. The supplemental gets added to the base incentive for qualifying income-limited individuals buying a new BEV or PHEV. There is no MSRP cap for a used EV.

The CHEAPR incentive is limited to once per driver per lifetime. This is not well called out on the CHEAPR website and we have received complaints from people who did not notice it (it is buried in the FAQs). It is different than the federal tax credit which can be used each time someone buys or leases a new EV.

Other CHEAPR Program Details

There is still a fuel cell incentive and the MSRP cap for an FCEV is still $60,000, though there is none of that type of vehicle being brought into the state presently.

Dealers receive a small incentive of $75. This once upon a time was higher. DEEP, in its analysis for their EV Roadmap, questioned whether the dealer incentive accomplished its objective because most of the time it was not being passed along to the salesperson, which was the basic idea. However, it remains in this reduced form.

Income-Limited Incentives and Eligibility

The incentive for a used EV applies to purchases from a licensed dealer. This applies to any dealer of used cars, not just new car dealers that also sell used vehicles. It does not apply to private sales.

An individual’s eligibility for the income-limited incentive is determined by whether that person is already participating in certain assistance programs. Administratively, this is simpler than performing an income verification, but it still takes a few steps and involves a lag in receiving the money. These are the programs that are determinative:

Assistance for Low Income People

Unlike the way the primary part of the program works, where it can be cash on the hood, the buyer completes an application to confirm eligibility based on one of these programs. DEEP estimates that it will take about a month to process the paperwork at which point a rebate check will be issued. This process can be done online (desktop or mobile) or via postal mail. This is the workflow:

CHEAPR Rebate Workflow

Since nobody wants an applicant to get a surprise denial, DEEP promises outreach and education so that buyers understand what is involved and whether they qualify before filling out the application.

Incentive Structure

As noted in the table at the top of the page, someone buying a new BEV will receive a $2250 incentive. However, the way it is actually structured is that the base incentive of $1500 from the current program is actually retained and a “stimulus increase” of 50% is added to it. This additional stimulus is earmarked for calendar 2021, funds permitting. It will be tracked and reviewed regularly. This is why you get that odd $1125 number for a used PHEV. The base is a more neatly rounded $750. Each incentive size will then revert to its base level in 2022. We will update our information as it gets confirmed closer to the end of the year.

Start Date

The Centers for Sustainable Energy, the consultant that runs the program, needs some time to make the below-the-line changes in order for it to become operational. The expectation is for an official start date of around April 1.

Our Take

The EV Coalition made a proposal to the board that would have raised the stimulus to $2500 for BEVs and the MSRP cap to $50,000. The incentive including the stimulus is close to our proposal but the MSRP cap remains at a level that excludes too many vehicles. According to Cox Automotive, the average cost of an EV is $55,600. MSRP caps exist in other states but at much higher levels: MA – $50,000, NJ – $55,000, NY – $60,000. Given that the program was about 70% underspent in 2020, we expect it will underperform in 2021, though to a lesser degree.

We like the introduction of the equity aspect of the program, particularly the used EV incentive, as this market is not well-developed.

This structure of an incentive plus a stimulus adder is not the most consumer-friendly formulation. This allows the incentive to revert to a lower level after this year without making a formal change to the program. It is administratively convenient, but it has the potential to be confusing. To the consumer, it will still be a change. We think the incentive should be the incentive and if it needs to be changed, it needs to be changed.

The fuel cell incentive is there because the state is trying to be supportive of this industry. We are not sure if there will be a compelling and cost-effective case for hydrogen in light-duty vehicles. Be that as it may, our main issue with this is the way it has been used as a misleading headline. Perhaps that will change.

 

9 thoughts on “New Program Rules Adopted by CHEAPR Board”

  1. That’s a bummer. I was looking to buy a new VW I.D.4 but the incentives would rule out all but an absolute base model with cloth seats.

    Reply
  2. The MSRP cap should be raised. It makes no sense at $42,000. I’d love to buy a Model Y long range this year. The state should be making EV adoption easier, this move doesn’t do that.

    Reply
    • Yes, anything that is included in the final price of the car. If you traded in the tires after purchase, that could be a way around that part of it.

      Reply
  3. So if I were to consider a used Hyundai Kona EV later this year, what would the rebate for this be based upon the new rebates? Thanks!

    Reply
    • It would be $3,000 IF you qualify as an income-limited individual based on the chart that is reproduced in the post, which includes receiving supplemental social security or food stamps, for example.

      Reply

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