Electric Car Rebates to End for California Wealthy

Tesla model s 70D - H 2015
Courtesy of Tesla Motors

Tesla model s 70D - H 2015

Nearly three-quarters of the rebates in 2015 were granted to households earning more than $99,000.

In a move that could have ramifications for Tesla, BMW, Porsche, Mercedes-Benz and other makers of luxury electric and plug-in hybrid vehicles, California will end rebates for some high-income buyers.

The California Clean Vehicles Rebate Program currently offers incentives ranging from $1,500 to $5,000 to purchasers of electric, plug-in hybrid and hydrogen fuel-cell vehicles.  

Alex Bernstein, senior pricing analyst at CarsDirect, reports that a disproportionate number of the rebates have gone to high-income buyers.

According to data compiled by the Center for Sustainable Energy, which administers the program, in the second quarter of 2015 more than 26 percent of the rebates went to recipients earning more than $200,000 and nearly three-quarters to those who earned more than $99,000.

To adjust for the disparity, the program will eliminate the $2,500 rebate for electric cars and $1,500 rebate for plug-in hybrids for buyers earning more than $250,000 for individual filers; $340,00 for heads of household; and $500,000 for joint filers. The $5,000 rebate for fuel-cell vehicles is unaffected — a potential windfall for Toyota's upcoming Mirai hydrogen-fuel cell sedan.

Rebates for lower-income buyers were doubled to $3,000 for a plug-in hybrid and increased 60 percent, to $4,000, for electric vehicles. Fuel-cell cars qualify for a $6,500 credit.

The changes must still be approved by the California legislature.The Clean Vehicle Rebate Program has granted more than $217 million in rebates since 2010.

Telsa’s standard pitch to buyers is that the combined state and federal rebates, which in California are the equivalent to a $10,000 discount, make the Model S, which starts at $70,000, more affordable.