Clean-car rebate program gets second shot

Incentive was so popular it ran out of money last year. NJ now looking to offer benefits again to those who buy electric vehicles
Credit: (AP Photo/Richard Vogel, File)
File photo: An electric car being charged

The state last year doled out $36 million to help people buy or lease more than 7,000 electric vehicles with most of them receiving $5,000, the maximum incentive available to offset their higher costs.

By many accounts, it was a successful year for the new Charge Up New Jersey program, an effort designed to speed up public adoption of zero-emission vehicles. It proved so popular the state Board of Public Utilities had to end the program in mid-December because it had run out of funds budgeted for the effort.

Now, the agency is gearing up to administer a second year of the program with modifications on the incentives drivers may obtain and steps to simplify the application process, proposals outlined to mixed reviews during a virtual meeting of stakeholders last week at the BPU. One change would apply the incentive at the point of sale or lease of a vehicle where the rebate is taken off the price of the car, simplifying the application process.

With only 40,000 electric vehicles on the road in New Jersey, however, the state has a long way to go to achieving a legislative mandate to put 330,000 zero-emission cars on its roads by the end of 2025.

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READ: The state wins praise for switching to electric vehicles

Recognizing that, some stakeholders urged the board to increase funding for the program so that it does not run of money again when there are plenty of applicants trying to secure rebates, as happened last year.

Lower rebates?

Other stakeholders criticized lowering the rebates, noting that many electric vehicle manufacturers have increased prices, making the purchase or leasing of the cars less appealing even with the rebates.

Last year the program opened in May but shut down on Dec. 15 when the eligibility window was closed. The new rebate program is not expected to open until after July 1, when the state budget has to be adopted.

“It is essential for a program to run a full year,’’ said Zachary Kahn, a senior policy adviser for Tesla, a maker of electric vehicles. “We’ve seen a great drop-off because people are waiting for the incentives again.’’

Still, Tesla was by far the most popular vehicle to participate in the program, accounting for 83% of the incentive applications. All other makes and models made up 17% of the program’s disbursements. Approximately 93% of the applicants received the maximum $5,000 incentive, according to BPU staff.

In its new straw proposal, the BPU staff is seeking to make electric vehicles more available to more middle-income customers, expanding the number of models and makes eligible for the incentives, according to Cathleen Lewis, a member of the BPU’s Office of Clean Energy.

Gov. Phil Murphy signed a law in January 2020, hoping to spur electrification of the transportation sector, the largest source of global warming pollution. Among other things, it directed the state set aside $30 million annually for a ten-year period to provide incentives to motorists to switch to electric vehicles.

But the state faces other problems in achieving an aggressive transition from gas-based cars to zero-emission vehicles. The economic slowdown created by the COVID-19 pandemic didn’t help, leading to a shortage of vehicles because of a lack of computer chips integral to zero-emission cars.

Not enough cars

The lack of availability of stock in New Jersey contributed to the lack of diversity in the incentive disbursements, according to the BPU staff. “Many car buyers indicated that their vehicle was not present or offered in New Jersey,’’ according to the straw proposal.

Kathy Harris, a clean-fuels-vehicle advocate for the Natural Resources Defense Council, suggested the BPU allow zero-emission vehicles purchased or leased out of state to be eligible for the incentives as long as they are registered in New Jersey. She also urged the state to increase access to these programs to residents of low- and moderate- income communities.

Still, she praised New Jersey’s incentive program as the most generous in the country. “The rebate program sets up New Jersey as the East Coast’s leader in clean vehicles,’’ she said.

Doug O’Malley, director of Environment New Jersey, said the state needs to ramp up the program in the early years of the decade. “The rebates were designed to goose up the market to get early adapters to get behind the wheels of electric vehicles,’’ he said. “They were not designed to purchase EVs for everyone.’’