As of December 3rd, 2019, California's Clean Vehicle Rebate Program (CVRP) is undergoing some significant changes.
EV Incentive News
The reshaping makes it pretty clear that the goal is to use the available funds to better serve low to moderate-income individuals and families, while reducing the number of rebates issued to higher-income applicants. Some of the changes that will help to achieve that goal are capping the rebate to vehicles with MSRP of $60,000 or less, limiting the rebate to one per individual (lifetime) and reducing the rebate from $2,500 to $2,000 for battery electric vehicles, and from $1,500 to $1,000 for plug-in hybrids. Rebates for fuel cell vehicles have also dropped by $500, from $5,000 to $4,500.
With an increasing program demand that exceeds the current program budget, the California Air Resources Board approved changes to ensure that this year’s funding allocation provides a meaningful incentive to encourage EV purchases while maintaining a program that is viable for a longer portion of the upcoming year. On December 3rd, 2019, the requirements for CVRP will be changing. If the CVRP rebate was important in your decision to purchase an electric vehicle, we encourage you to apply as soon as possible and prior to the new program changes taking effect. All applications received on or after this date will be subject to the new Terms and Conditions in place. - CVRP website
It's yet to be determined if these changes will significantly hurt sales of the higher-end EVs in California, like the Audi e-Tron, Jaguar I-Pace and Tesla's Model S & X, but one thing's for sure: it certainly won't help.
The real CVRP winners with these changes are the low-to-moderate-income individuals & families. They now get an "Increased Rebate" equal to $4,500 for battery electric vehicles and $3,500 for plug-in hybrid purchases or leases. They also qualify for a whopping $7,000 for a fuel cell vehicle.
Consumers with household incomes less than or equal to 300 percent of the federal poverty level are eligible for an increased rebate amount as listed below. The option to apply for an increased rebate is shown on the online application based on the income information the applicant provides. Applicants who are claimed as dependents are not eligible for increased rebates regardless of their income. Increased rebate amounts are available for fuel–cell electric vehicles, battery electric vehicles, and plug–in hybrid electric vehicles. - CVRP website
In addition to the financial changes, eligibility for plug-in hybrid vehicles has also become more strict. Currently, to be eligible for the rebate, a PHEV had to have a 20-mile all-electric range, according to the EPA Urban Dynamometer Driving Schedule, or (UDDS). Under the new rules, a PHEV must now have a 35-mile range under the UDDS range rating scale. It's worth noting that the UDDS is less strict than the EPA's 5-cycle range test that we typically use for our official EV range ratings.
For instance, the 2018 Audi A3 eTron PHEV is currently eligible for the $1,500 CVRP rebate. However, it only has an EPA range rating of 17 miles per charge. The current CVRP program requires PHEVs to have a 20-mile all-electric range, so why is it eligible? That's because it does have more than a 20-mile all-electric range using the UDDS range rating. Confused? Yeah, I was too when I looked into this. Why they just don't use the standard EPA 5-cycle range test that's used everywhere else is unknown to me.
Personally, this is one aspect of the changes that I agree with. Twenty miles of range under the UDDS is too low of a bar. If these low-range PHEVs continue to qualify for subsidies then the manufacturers won't feel pressured to offer them with more all-electric range. A 35-mile UDDS range is probably the equivalent of about 25 miles of range on the EPA 5-cycle test, and I think that's a good low-bar for qualification. In 2020, PHEVs with under 20 miles of all-electric range shouldn't qualify for any incentives, in my opinion.
Here's an outline of the new rules directly from the CVRP Website:
Purchaser or Lessee Requirements:
Vehicle Purchaser or Lessee:
- Rebate limits are reducing from 2 rebates to 1 rebate per any single entity for individual and business applicants. This will not be applied retroactively. Applicants who have not already met their rebate limit prior to December 3, 2019, will be eligible for one additional rebate after December 3rd, 2019. Those that have already met their two-rebate limit will remain ineligible for an additional rebate.
- Applicants will need to submit applications within 3 months of the vehicle purchase or lease date (post-purchase applications only). Vehicles purchased or leased prior to December 3rd, 2019 will continue to have an 18-month eligibility window in which to submit an application.
Important: Applications are subject to the Terms and Conditions in place at the time of application submission. Exceptions will not be granted.
Vehicle Eligibility Criteria:
- An MSRP cap of $60,000 will be instituted on all vehicles with the exception of fuel cell electric vehicles
- The Urban Dynamometer Driving Schedule (UDDS) all-electric range will be increasing from 20 miles to 35 miles.
Beginning December 3, 2019, vehicles that no longer meet eligibility requirements as defined above will be removed from the eligible vehicle list. Please check back soon, as the final vehicle eligibility list is still being determined.
Eligibility Based on Income:
- Income verification is required for all members of the household ages 18 and older (currently 17 and older).
Vehicle Rebate Amounts:
- Standard rebate amounts will be reduced. The new rebate amounts will be:
- $4,500 for Fuel Cell Electric Vehicles
- $2,000 for battery or range-extended electric vehicles
- $1,000 for plug-in hybrid electric vehicles
- $750 for zero-emission motorcycles
- Increased Rebate amounts are unchanged.
- $7,000 for Fuel Cell Electric Vehicles
- $4,500 for battery or range-extended electric vehicles
- $3,500 for plug-in hybrid electric vehicles
- $750 for zero-emission motorcycles
In the above video, Alex Guberman from E For Electric offers his thoughts on the CVRP changes and makes it pretty clear that he's not a big fan of them. What are your thoughts? Do these changes make sense? Should higher-income families that purchase high-end EVs continue to benefit from these public incentive programs? Let us know in the comments section below.