CARB Considers Eliminating Tesla Model S and Cadillac ELR From CVRP Rebate Program

APR 17 2014 BY ERIC LOVEDAY 82

Tesla Model S

Tesla Model S in Washington, D.C.

The California Air Resources Board is currently evaluating a proposal from a staff member in which both the Tesla Model S and Cadillac ELR would be excluded from CARB’s Clean Vehicle Rebate Project if the proposal gets approved.

Cadillac ELR

Cadillac ELR

California’s ARB is somewhat strapped for cash, so there have been several ideas tossed out there in an effort to save some money.  One of those ideas calls for a reduction in the state’s CVRP.  According to the proposal:

“Electric vehicles costing more than $60,000 may be eliminated from a major rebate program and the incentives themselves would be reduced by a fifth of their current level…”

Reports Capitol Weekly.

Complete details of the proposal can be found here.

The reasoning behind the proposal is twofold.

  1. CARB is running low on funds
  2. CARB would prefer to see CVRP rebates go mostly to those in disadvantaged communities who are in need

CVRP was established to encourage the purchase of low or zero emissions vehicles, so this price tag cap runs counter to that.

Tesla says that such a change to CVRP could “jeopardize the purchase of more than 2,500 Tesla vehicles in the state.”

According to Capitol Weekly, the CVRP is desperately low on funding:

“The ARB’s Clean Vehicle Rebate Program, or CVRP, faces an estimated $30 million funding shortfall during the current fiscal year. That amount is all but certain to increase in 2014-15, absent changes, the staff noted.”

“The program has issued about $100 million worth of rebates on 49,000 vehicles through January 2014, reflecting a 160 percent increase in rebate activities in 2013 compared with 2012. Projections for the 2014-15 put the rebates at $130 million to $200 million.”

CVRP is faced with several choices though, one of which excludes expensive plug in vehicles and one of which does not.  CVRP could simply reduce the amount of its rebate to all qualifying vehicles.  This, obviously, would be the least objectionable choice.  What’s fair for one is fair for all, right?

But the proposed change of capping rebates at $60,000 basically singles out Tesla Motors (yes, the Cadillac ELR would be knocked off the eligibility list too, but it sales are so low that we’re not concerned with the potential outcome from its losing CVRP rebate status).  However, Tesla is very concerned.

Tesla says that the CVRP is “one of the most successful consumer facing programs for the California Air Resources Board. To date, it has contributed to the sale of 56,617 advanced technology vehicles in the state … including 5,800 Teslas.”  Tesla adds that this proposed change “aims to paint Tesla as the sole purveyor of EVs to the wealthy, while disregarding the fact that individuals of similar affluence may still continue to receive a rebate by purchasing a different EV.”

We side with Tesla Motors on this one, as it’s our belief that it’s simply unfair to single out one automaker just because it happens to make rather expensive vehicles.  CVRP wasn’t established to help those in “disadvantages communities” buy electric vehicles, but rather to encourage everyone within the state to buy a plug-in.  Everyone includes the wealthy, even if the rebate doesn’t influence their decision to buy electric.  Therefore, we can’t get behind CARB on this one.

List of Currently Eligible Vehicles Broken Down by Price

List of Currently Eligible Vehicles Broken Down by Price by CARB

CARB Statement on the Topic

CARB Statement on the Topic

CARB Graphic on the Topic

CARB Graphic on the Topic

Source: Capitol Weekly via AutoblogGreen

Categories: Cadillac, Tesla

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82 Comments on "CARB Considers Eliminating Tesla Model S and Cadillac ELR From CVRP Rebate Program"

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They should just increase the funding instead of wilfully excluding Tesla for weird reasons.

Your mandate is zero emissions, not communism.

Nothing to do with weird reasons, just math.
The rebate is less of a deciding factor for buyers of luxury cars — see the last graph.

The reasoning is that, therefore, focusing on groups more receptive to incentives (e.g. cheapskates like me who can’t afford a Tesla or ELR) would result MORE plug-in vehicles on the road for the same budget.

Your math does not add up.

Throwing money at vehicles that are sold on price only is not going to help EV introduction.

The math also says that swaying a guy to purchase a Tesla instead of a Panamera will prevent more air pollution than swaying a guy to buy a LEAF instead of a Versa or Fit.

Remember too that cars have 15 year lifetimes (and probably longer for EVs). My first car was initially purchased by a fairly well of guy, and six years later I got it for 1/5th of the MSRP.

This isn’t about math. It’s about scoring brownie points from people holding the myopic view that EV rebates are going to the rich so should be cancelled.

Eliminated credits for Teslas won’t increase the number of EVs on the road. It will simply transfer the CARB credit from the Tesla to the Leaf (or 500e or whatever). The number of new EVs added to the road will be the same.

We shouldn’t see CARB as a rebate to the consumers, but more like a bonus for the car makers. It’s like saying “because you built and sold a car that won’t send thousands of dollars overseas for petrol, here some of that money, and please build more”.

Of course, it won’t last for forever. But I clearly don’t see why Tesla should be exclude.

Exactly!

The mask slips. The irony is that even if they knock out Tesla, it still won’t help “disadvantaged communities”. You still have to purchase a brand new, fairly expensive car. Truly disadvantaged communities can’t afford any EV. Or if they can, they aren’t “disadvantaged” in any meaningful sense of the word.

+1

Absolutely.

That isn’t really true. Yes, I agree that a poor person can’t really buy a new Volt or Leaf. But when the used versions hit the market, they are at least $7500 less than a new one (since would would buy a used one when you can buy a new one that comes with a $7500 tax-credit). Thus, people of lower incomes will benefit from discounted EVs hitting the used market.

The disadvantaged communities are generally the places that don’t have readily available public chargers. So even if used EV’s were available, there’s still the issue of finding parking spaces with chargers. That or pay out the nose at the pay-chargers. Home charging is generally not an option for apartment dwellers.

At the same time, allocating scare public incentives for a $70k ev does sound a bit of a stretch. How about reduce the rebate amount on a sliding scale? The highest rebate goes to the most affordable EV’s (also the ones with the most trade-offs).

People in public housing are not buying off lease or recent pre-owned LEAFs, Sparks or Smart EDs.

Not only is it a charging issue but a price issue.

People in public housing buy $500-$2500 used cars. By the time it is the third or fourth owner the rebate is irrelevant to the used car price.

I don’t agree. Car makers take in consideration CARB rebate and others when fixing the pricetag. So they fix pricetag to what the consumer is ready to pay + what governments will give. The day those rebates will be over, those pricetags will probably fall of the same amount pretty fast. All car makers want to make the most money out of each consumers. That’s why I’m telling the CARB rebate isn’t for consumers, it’s for car makers.

That is a correct observation. I lived in a country that had a 15% tax credit on the purchase price of low-co2 cars. Those cars were also 15 % higher in price compared to the same car in neighboring countries. When the credit ran out, all the manufacturers announced a price cut of almost ….. 15 %.

That has not been my observation. Hybrids like the Prius, for example, had tax credits in the mid 2000’s. Pretty good ones too, in fact, I think it was on par with the current EV credit. However, once the credit went away, the base price of a Prius did not drop (it was roughly $21,000 in 2008, the year that I believe the credit expired for Toyota). In fact, the base price of a Prius has since gone up to almost $25,000.

I think that manufacturers count on the notion that a hybrid is considered a “premium” and folks willing to pay for that, will. I expect that they will treat plug-ins the same way.

That won’t always hold, as $7500 fed tax credit is only good for first 200K EV cars of the manufacturer. So, after 1-2 years, new leaves may not get thsi credit. After 10 years, tesla buyers won’t get this credit either.

It would be interesting to see the data of used Volts and Leafs. I would be surprised to see the $7500 tax credit figure into resale pricing. First you need to owe $7500 in taxes to take advantage of all of it (which likely means you are not financially disadvantaged). Second, you still need to pay or finance the full amount–and potentially recoup some of the $7500 at a later date.

O

The second hand car buyer won’t get any tax credit. Rather, the price of the 2nd hand car would factor in the credit enjoyed by original buyer who bought it new. So, a new leaf might cost $31K. But an 1 year old use Leaf might sell for $16K, for example. 31 – 10K rebates – depreciation.

There is a real doubt that providing luxury car buyers with a bonus effects the purchase decision. Since it has little relationship to buying the car, why give wealthy individuals a benefit when limited resources can be focused on purchase incentives that really make a difference?

Doesn’t CARB have a tap into the vein of the ~800mm/yr Cap&Trade program? Two years ago, those revenues were zero.

Then, there’s always the 200mm slated for hydrogen filling stations? Will they effect the air more than electric incentives?

Just drop all PHEV’s, anything with an ICE. Only rebate on EV products.

ZEV is the goal.

You have to love the term “PZEV” or Partial Zero Emission Vehicle. Its like saying that the number 4 is a “partial zero” number because 4+0 makes 4.

This kind of nonsense qualifies the makers of the term as “partially intelligent”.

ATPZEV

Almost Totally Partial Zero Emission Vehicle

And an AT-PZEV is just a Partial ZEV CREDIT vehicle that additionally has specified Advanced Technology drive train or energy storage components.

PZEV means the vehicle earns a portion of the credit that a ZEV would because the vehicle has SULEV tailpipe emissions, zero evaporative emissions, and an emissions warranty of 15 years / 150,000 miles. This partial ZEV CREDIT vehicle is referred to as a PZEV.

Note to Tesla, sell the cars with a tiny battery with low cost and sell a big ass’d battery separately.

😛

…or lease the battery to the customer separately with an option to buy out the lease at any point (ie after they get the tax credit).

You figure there’s a $10k price hike between the 60 and 85, so sell the car for $20k under the current 60 MSRP with a battery lease.

The CARB qualifications take into account the battery size, so it might be hard to leave the battery out of the car and yet still qualify for a CARB rebate.

By CARB’s formulation a 16KWH pack is all that’s needed for the full $7500.
I’m pretty sure that 16kwh pack has a good trade in value.

The CARB rebate is not dependent on battery size. If it is battery only (BEV) it is straight $25000. If PHEV, it is $1500.

You are mixing up the federal tax credit of $7500 which depends on battery size. 16 kwh will get the full $7500 credit, smaller battery gets less. But if you buy a battery-less car, it will probably disqualify you from this $7500 credit as the battery size is zero in that case. This tax credit law isn’t changing, and is not controlled by CARB.

$2,500, not $25,000

“CARB would prefer to see CVRP rebates go mostly to those in disadvantaged communities who are in need”

Yes, it brings a tear to my eye to see folks driving their Leafs, RAVs and Sparks down to the welfare office…

ROFL !

You can’t even afford any new car on welfare…never mind an EV.

Or, apparently, a sense of humor…

Good come back. Perhaps someone could define a “disadvantaged” neighborhood, and perhaps we could get some idea of the sinister force that took away their advantage.

Well . . . you could also view this as CARB considers a move to incentivize Tesla to reduce their prices.

Which isn’t possible until 2017 without compromising the product or the brand.

Seems odd that CARB would “bite the hand that feeds it” with Tesla.

Then again, how long has CA been in desperate need of a government that can actually stick to a budget?

FYI I bought my Chevy Volt in March of 2011 in CA, so obviously a state rebate had nothing to do with my purchase decision.

Make the base Tesla X sticker be 59,999.99.

MrEnergyCzar

Sadly, the Model X is going to cost MORE than the Model S.

Here’s an evil thought:

Its payback for Tesla bypassing California for the advanced battery plant.

Just sayin’

This makes sense. The larger percentage of the sale price, the more of an incentive that the consumer may actually need to make the purchase/lease of an EV.

Which will in turn put more EVs on the road on a daily basis, replacing higher mile ICE commuter vehicles.

Instead of assisting with the addition of another vehicle in a home fleet where the owner really does not depend on a rebate for the purchase.

But Tesla will still benefit, with the launch of the new higher volume Model E that should be priced around $40k.

wow…..the MSRP pricing of a few models in the list is wrong.

The Fusion Energi is $34,700 not $39,100

Focus Electric is $35,170 not $37,200

Don’t blame us on that – all CARB there, lol. I don’t imagine its a big priority keeping too current for them on that one.

Haha, Bloggin I read your post a minute too late I guess. I just posed the same question about the Volt price.

To Jay’s point, I guess I’ll blame CARB on this one. 😉

Yeah, its one of those ‘things’ – do you put it in, or leave it out charts. Gives a ‘sorta’ representation of the eligible vehicles, lol.

ps) I grabbed your other comment that you posted a bit early, (=

The chart clearly states the prices shown are for 2013 base models. All of the price reductions were taken on 2014 models, so it’s no surprise the list is out of date.

Good job CARB, hurt the one car manufacturer from your state. So your logic is to not pay out money for yourself, but hurt the entire state that collects money for each sale of a Tesla and the registration fees. Less sales of cars means less money for CARB.

This is a good point. The 5800 Model S that qualified for the rebate generated about $45 million in sales tax revenue.

They need to take that argument and ask for the funding to be increased to keep Tesla in the program.

I’m OK with this so long as CARB also excludes any FCV’s with MSRP’s over $60K (aren’t they all going to be over $60K?)

The odds of that happening? even less then the odds that H2 FCV’s will ever make economic or environmental sense.

Regarding “vehicles costing more than $60,000 may be eliminated from a major rebate program”.

That pretty much would cut rebates for Fuel Cell Vehicles as well!

Should CARB choose to target a California based auto manufacture while giving increased incentives to foreign imported alternative vehicles, there could be some political fallout. Success of CARB and its programs is measured by meeting the states mandated GHG emission reductions.

That would be interesting

No, the price limit doesn’t apply to fuel cell cars.

In fact, fuel cell cars get a $5,000 credit from CARB

So, the $499/mo lease of Tucson fuel cell that begins next month in LA looks really good. For 3 years, pay $18K but get back $5K, with net cost of $13K = $361/mo including service and H2. This could get some people seriously interested, if it works out.

Wonder if CARB can use the same high MSRP logic with providing incentives to funding a $1 million Hydrogen Fueling station vs. installing $50-100,000 DCFC station?

10x DCFC locations would service many more ZEVs than one H2 filling station. Less than 1/10 incentives needed per location.

Any organization promoting hydrogen over BEVs has serious issues that need to be resolved…

FCEVs are the best. They capture greenhouse gases and convert those back to water! This is ‘negative emission’ vehicle or NEVs, not ZEVs.
Besides, the practicality is a huge plus.
Go H2!

Converting greenhouse gases into water is alchemy and cold fusion.

Doesn’t matter. They have no chance in cars for decades, if ever.

The instant a 30kW fuel cells gets below $20k (just the FC, not the tanks or battery or drivetrain), Musk will buy every one for Solar City and use it for H2 storage, allowing people to disconnect from the grid. Hell, even the grid may find that economical.

He could even use them to make standalone solar Supercharger stations that don’t need any grid connection.

If this happens – the BMW i3 will see a big spike in sales!

I’ve been advocating for a year or twothat both state and federal incentives should be limited to PEVs selling (not MSRP, so dealers can’t play numbers games) for no more than $40k excluding government fees, both because of the backlash, and because the state should be trying to drive prices down to where the middle class can afford them, not subsidize people who can easily afford to pay some more. At worst, Tesla will lose a few customers for S60s who are stretching to buy one, and they may see some change in the balance between S60s and S85s, or at least some loss of the higher priced options. But it’s ridiculous to be subsidizing people who can afford to pay $70k or more for a car. Teslas can sell without the subbsidies, while the ‘affordable’ EVs (currently) can’t.

And to really reach the height of absurdity, does anyone think that the state or federal governments should be subsidizing people buying $845,000 Porsche 918s? Oh, those poor people must be digging around under sofa cushions to find that last few thousand dollars.

This is a good point. We don’t need high end luxury cars as the symbol of going green; we need to encourage more of the mass market cars that will, hopefully, move the common people towards these technologies. Teslas have a very limited market, and there is no point wasting tax dollars subsidizing these niche clientele. Besides, this also brings whiplash against any democratic government that does so.

Agreed! $40K seems to be a good cutoff at this point. Why provide more incentive to buyers of high-priced EVs that can, in all likelihood, take full advantage of the $7500 fed tax credit? Would rather see those $$$ go to someone that doesn’t have enough income to have a >$7500 tax liability and drives way too much for a lease to be a reasonable option.

Why does CARB suddenly seem to be out to get Tesla. Remove the rebate and overly encourage FCV. Something doesn’t smell right. Back in 2000 CARB caved to the established industry and killed the EV movement. Could it be happening again?

Its a surprise to them that they’ve given out some number of rebates? Can’t get easier to calculate than that. Given the $ they have, divide by the rebate and thats how many cars they can help fund. Should not be a surprise after the fact. Why change rules now other than to kill Tesla.

There are few reasons I can think of: 1) whiplash against subsidizing rich is growing. 2) Tesla is dangling the gigafactory carrot to other states 3) CA already gives Tesla a free pass to sell directly in CA. 4) News about massive graphite pollution caused by Teslas go counter to being ‘environmentally friendly’. 5) Conserve funds to promote the more practical fuel cell vehicles.

All bulls***. Fuel cells for cars are grotesquely inefficient and expensive (at a million bucks a car); the “graphite pollution” nonsense is completely made up (Tesla is arranging to source its graphite domestically); etc.

It’s been argued that, instead of giving people a rebate (or tax credit) on their car, the government should invest that money in basic research on batteries. This, in turn, would be likely to speed a reduction in cost of all batteries – benefitting consumers of low, middle, and high-end cars alike. The problem with a rebate is it distorts the market; decisions about whether Tesla should or shouldn’t be subsidized this way can be rationalized in any direction you want. Put the money into basic research, and those who do the best at taking that basic research, and creating a desirable product at a good price point, should be rewarded the most.

“FCEV technology, while in early stages of commercialization for light-duty vehicles, is not as available in the market place as BEVs or PHEVs. Until manufacturers are able to deliver increased vehicle volumes and options, and until early adopters begin to accept the technology, these vehicles remain in the lower phase of commercialization. Because of this, staff recommends offering rebates for FCEVs at $5,000, consistent with the rebate levels offered to BEVs when these vehicles were in that same stage of commercialization. FCEVs would also not be subject to the MSRP cap, consistent with the initial introduction of BEVs.” So FCEVs will get double what Tesla cars got while costing about the same? Now that Teslas get $2K FCEVs now get 2.5x more. This is stupid. If i get an FCEV on lease for $599/month, I can use the $5000 to pay 8 months of lease payments. They say that they are doing for FCEVs what they did to BEV, if that is true they should only give out $2500 per car then. Some may say, “Oh, well FCEVs are more expensive than BEVs so they get more money for incentives.” If they are so expensive then why give it to… Read more »

Somebody needs to encourage the early adopters of new technology. it is no different that big incentives for early solar panel adopters. Once critical mass is reached for fuel cell cars, the rebate could potentially be reduced. Right now, fuel cell is in a catch 22 situation – no cars, so no interest in building refueling stations and vice versa. I think, CARB is doing right to break this loop by incentivizing early adopters of fuel cell cars. The technology seems to be at a juncture of being practical for mass market.

Consumers of California’s first BEVs – the 2002-2003 RAV4 EV – received $9,000 rebates. And consumers of 2011-2012 BEVs received $5,000 rebates. The BEV rebate amount was halved so as to rebate twice as many BEVs when the numbers started taking off.

Especially since none of the Fuel Cell Vehicles are actually sold to anyone, and each is built at a cost exceeding $1,000,000 by their manufacturers…

Let’s see… Battery Electric, under $100,000… Roadworthy… People are buying them… No CARB credits for you!

Fuel Cell ‘electric’ Vehicles… Not for sale… Manufacturer owned testbeds of immense expense… Limited range… Free fuel (sponsored by SHELL Oil)… MORE CARB credits for you!

Interesting.

Honestly, I don’t think it will impact Tesla sales much at all. As long as they keep the white carpool stickers. Those white carpool stickers are easily worth 10x as much as the state rebate to a Tesla driver. They say time is money, but as a matter of fact, time is more precious than money.

Incentives work both ways…..

A price cap on rebates is an incentive for Tesla to get cracking on the Model E.

Selling high end luxury cars/SUVs alone isn’t enough to drive mass market adoption of EVs.

It’s also an incentive to drop the price of the Model S 60 to $59,995 the day the first Model X is delivered to a Customer.

I agree with the plan but I would lower the bar to $35k, not 60.

Boo-hoo. Rich people no longer get rebates. If someone is dropping $70k+ on a car, does anyone really think that a small rebate is going to push them from a conventional vehicle to electric?

The ‘rich people’ who are being helped here are the auto manufacturers who are rolling out $1,000,000 FCEV testbeds that aren’t for sale to anyone, yet they will get additional CARB credits, while eliminating a successful battery electric competitor from eligibility.

Remove all the foreign vehicles from the list and CARB will have money for plenty of American vehicles (Cadillac, Chevrolet, Ford, and Tesla Motors only). Those foreigners are getting American money, so what do we get from them? Nothing!

They would save quite a bit of money by not supporting the Hydrogen Fuel Cell initiative. None of those million dollar cars are actually sold to anyone. SHELL Oil, Toyota, Honda, and all the rest should be able to manage that travesty on their own.