Essential Facts about California’s Electric Car Rebates

By · July 29, 2010

Mike Ferry

Mike Ferry, transportation programs manager at the Center for Sustainable Energy, manages California's Clean Vehicle Rebate Project. He's plugging in a Toyota Prius Plug-in Hybrid at Plugin2010 in San Jose.

Government incentives are playing a major role in encouraging adoption of electric cars. In addition to a federal tax credit worth up to $7,500, the State of California is offering a $5,000 rebate for a pure electric car, and $3,000 for a plug-in hybrid. But before you decide which electric-drive car to buy, you should understand the finer points of the rebate program.

Yesterday at the Plugin2010 conference, I spoke with Mike Ferry of the Center for Sustainable Energy, the San Diego-based non-profit that manages the program. As the center’s transportation programs manager, Mike oversees the “Clean Vehicle Rebate Project.” He’s also a biofuels expert and holds a masters degree from UC Berkeley, with a focus on vehicle electrification in California.

Mike explained that the rebates started with California Assembly Bill 118, which passed in October 2007. That bill set aside roughly 200 million dollars per year for programs to reduce petroleum consumption and increase transportation efficiency. Most of the money went to the California Energy Commission. But one-third went to the California Air Resources Board, and a part of those funds focused on consumer incentives for electric-drive technologies. CARB contracts with the Center for Sustainable Energy to run the program.

First, the highlights and then an interview excerpt below:

  • By the time the LEAF arrives in December, there will be about $8 million left in the rebate pool—enough for approximately 1,600 of the expected 5,000 California LEAF customers.
  • California Assembly Bill 118 is funded through 2015, but proposed legislation could be a minor threat to the program.
  • On the day of purchase, you can apply online for the rebate. The money is available on a first-come-first-serve basis. If funds run out before you buy, you are placed on a queue for future funds, if and when they become available.
  • The Nissan LEAF qualifies for $5,000 and the Toyota Prius Plug-in Hybrid qualifies for $3,000. The 2011 Chevy Volt does not qualify all, although it’s expected to receive the necessary certification for the 2013 model year (due in summer 2012).

Brad Berman: How much money was allocated to to the Clean Vehicle Rebate Project?

Mike Ferry: The first year of funding was fiscal year 2009 – 2010. The state operates from July 1 to June 30. The first fiscal year was $4.1 million in funding, which carries through until it’s used up. And then on June 24, the Air Resources Board just approved additional funding for the next fiscal year of $5 million.

So, now there’s $9.1 million available at least until June 30, 2011?

No, until it’s used up.

What vehicles qualify?

Right now, our vehicle eligibility list includes three different medium-duty all-electric commercial vehicles; it includes three different zero-emission motorcycles; and it includes four different manufacturers of low-speed neighborhood electric vehicles. In terms of full function light-duty vehicles, we have the Tesla Roadster and the Honda Clarity, which is fuel cell vehicle, still electric drive.

But you fully expect the Nissan LEAF, as a zero emission vehicle, to qualify.

The LEAF will qualify. By the time, Nissan launches the vehicle in December, it will be on our eligibility list. The day you purchase the vehicle, the consumer is eligible to apply for a rebate.

So, with the sales slip, or leasing document, you can apply? To whom?

You apply to the Center for Sustainable Energy, because the state contracted us to manage the program.

Do you expect Nissan dealerships to have information readily available to their customers to advise LEAF buyers and leasees?

Yes. For instance, a lot of zero emission motorcycles we rebated came from a company called Zero Motorcycles. We worked with them and their dealers so that they have information to give to customers, like where you go on the website to apply. Actually, once you apply online, we take care of everything from that point.

How quickly to do you process the rebates?

Right now, when we receive an online application, I’ll get back to the applicant within two to three days, with either initial approval or disapproval. After that, we’re waiting for their paperwork to be mailed in. Then, it takes between one and two weeks to send a check.

The very fast turnaround may change, because initially the Air Resources Board gave us seed money so we could turn rebates around very quickly. That seed money is all gone. At this point, every time we get a grouping of rebates, we might have to go back to CARB to request funding, and they have their turnaround time. It’s one of the things we’re working on, because it’s important to us, it’s important for the state, and it’s really important for consumers to get that quick turnaround time.

We want to encourage and incentivize this market. A one-month turnaround time would be the max.

You started with $9.1 million in the kitty, of which some money has gone to rebates for Teslas, electric motorcycles, neighborhood electric vehicles, and commercial vehicles. How much is left?

Almost all of it. By the time the Nissan LEAF is launched in December, there will probably be about $8 million left. That’s an estimate and could change.

That means about 1,600 LEAF customers will get rebates.

That could change. There are number of zero-emission commercial vehicle makers that plan to bring a lot of vehicles to California over the next months. That could potentially take up to $2 million.

That could cut down the number of LEAF buyers to 1,200. How will you know if you get the rebate or not?

The day you buy a LEAF, you can go on our website and see if funds are available. You fill out the online application, and you’ll know right away if your $5,000 is reserved for you. As long you meet all the requirements and mail in all the documentation, it’s yours. It’s on a first-come-first-serve basis. Once you fill out the online application, you’re in the queue.

If funds are depleted, you still have your place in the queue. The Air Resources Board and state regulators are also looking into other funding sources because they know there’s not enough money to rebate all the LEAFs, and Volts in the future. If and when additional funding is brought in, you’ll have your spot in the queue. You’ll get the check when the funds are available.

What’s the source of the funds?

It’s vehicle and vessel registration fees, and smog abatement fees. That’s where the $200 million a year comes from.

What are the factors that will determine if the funding continues in future years?

AB118 is funded through 2015—unless a new bill is passed that changes the existing bill, and there are a few bills right now going through the Senate that is looking to take some of that AB118 funding and put to other programs. Right now, it’s funded through 2015, but that could change. That’s an unknown.

How does a vehicle qualify for the rebate?

All certification goes through the Air Resources Board. For light duty vehicles, like the LEAF and the Volt, all of the regulations follow the Zero Emissions Vehicle (ZEV) mandate guidelines. Vehicles have to be certified as EAT-PZEV, Enhanced Advanced Technology Partial Zero Emissions Vehicle.

The 2010 Prius, not the plug-in version just the regular version, is an AT-PZEV. The plug-in version is an EAT-PZEV. That’s the certification required to be eligible for the rebate project. The LEAF is a ZEV. The plug-in Prius is already certified as an EAT-PZEV.

Why does the Chevy Volt NOT qualify this year?

Regulation requires a 10-year, 150,000-mile warranty on the emissions system and the battery, and that’s not something the Volt is coming with. The Volt has an 8-year, 100,000-mile warranty. The other issue is the emissions system, and whether the Volt's emission system meets the CARB certification on the duty cycle. It’s easy to point to the battery and say done, but there are other issues.

The take home message is that it’s a complex story, and Chevy bringing the car to market very quickly meant that achieving EAT certification would have cost them more money than it’s worth. They would have had to devote engineering staff, and all kinds of resources, in order to get the vehicle certified with CARB for the rebate program. The economic calculation wasn’t worth it [to them]. However, they are doing it for the version of the car being launched in summer 2012, for the 2013 model-year Volt.

AB118 is funded through 2015, but we will reach a time when there’s less government support of these vehicles…

That’s the goal. Eventually remove all the government subsidies, and the technologies can stand alone in the marketplace.

Based on your master’s research and your work at the Center, do you think these electric-drive vehicles can stand alone by 2015 or soon after?

I’m optimistic. It has a lot to do with factors that people can’t predict right now. Battery prices, alternative business models like secondary use of batteries, and gas prices are huge.

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