Electric vehicles (“EVs”) are expensive. Although the government is keen on replacing the internal combustion engine (“ICE”) cars on the roads with zero-emission EVs, the high purchase prices of the vehicles lock out a large percentage of the population. According to the Fuels Institute, the average electric car owner has an annual household income of more than $100,000. In Washington State, for instance, high price points are preventing low-income residents, who make up a significant percentage of the population, from purchasing EVs.
This is despite the fact that Washington is one of the best states in the country to own an electric vehicle, says Scott Case, CEO of Recurrent. The state’s more than 1,000 hydroelectric dams ensure a constant supply of clean, affordable energy, and Washington also has some of the nation’s highest gas prices. Furthermore, its mild climate makes it great for EV performance because electric vehicle batteries can lose range in cold weather and degrade in high temperatures over time. State leaders are now thinking about providing rebates for EV purchases to boost adoption.
The rebates were part of Governor Jay Inslee’s proposed state supplement budget. If they pass, BloombergNEF electric vehicle associate Corey Cantor says, they would be among the most generous EV subsidies in the country. The proposed rebates would include EV credits for new and used electric cars to households that earn $250,000 or less for single tax filers or $500,00 for joint tax filers. Furthermore, they would only apply to electric cars that cost less than $55,000 or trucks, SUVs and vans priced at under $80,000.
An additional $5,000 would be availed for households whose income is less than 60% of Washington state’s median income. Households that meet the proposed conditions would have access to EV credits of $7,500 for new EVs, $5,000 for used EVs and $1,000 for zero-emission electric bikes and motorcycles. The supplemental budget would provide up to $100 million dollars to cover the proposed rebates. If Washington is to achieve carbon-neutrality by 2050, it will have to boost EV adoption among low- and middle-income earners.
Of the 86,226 EVs registered in the state, Tesla models are the most popular. With the cheapest Tesla, a base Model 3, going for around $46,490, it’s no surprise most EV owners are high-income earners. Per capita data shows that most of Washington’s EVs are concentrated in affluent, tech-centric cities in the East. EV rebates, coupled with investments in electric vehicle charging infrastructure, could bridge this gap and significantly increase Washington’s EV market.
As more local and state governments institute measures to increase EV penetration, the efforts of companies such as Lordstown Motors Corp. (NASDAQ: RIDE) to design and manufacture electric vehicle models suited to different customer needs will pay off a lot faster than anticipated.
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