California injects $25 million to extend electric vehicle rebates through summer

Recently Torque News reported that the California Air Resources Board (CARB) was toying with the possibility of removing the state rebate provided to electric vehicles costing north of $60,000, reducing the amount of the rebate to all vehicles by $500, or both. Though the agency desperately needed more cash to continue providing refunds to California EV buyers, we felt that the high-end EV policy would have made sense but unfairly singled out Tesla.

Through January of this year CARB had doled out over $100 million in rebates since March 2010 in amounts of $2,500 to battery electrics and $1,500 to plug-in hybrids. The agency expects to require an additional $130 to $200 million in 2014 and 2015 to accommodate rising electric vehicle sales.

Faced with empty coffers staring down a summer of projected high demand, CARB made what amounts to an emergency infusion of funding to extend the rebate program for the time being. The current waiting list of customers expecting a rebate needs $5 million, and the $25 million recently allocated by the agency will expand that waiting list to include potential summer buyers, including those purchasing the BMW i3.

CARB reports that the money has been accounted for in the Governor’s budget and will be distributed pending passage of the budget in the state Legislature. However, we worry that the Clean Vehicle Rebate Program is running on borrowed time. It has been enormously successful in contributing to strong EV sales in California, but demand for the vehicles has reached a point where it is becoming more and more difficult to provide funding for the rebates.

The dilemma of CARB raises the question of when electric vehicle subsidies should be removed. No doubt if the state rebate program were repealed in California sales of electric vehicles would suffer, but just how much is anyone’s guess. We are inclined to think it isn’t nearly time to recall federal and state incentives, although California could be an exception because of its established EV market. Simply reducing the amount of the rebate could be the best solution for all parties involved, keeping the rebates in place for a few more years to allow the EV industry to continue to build momentum.