What do you think a reasonable EV incentive program would look like?

[NoBeard]

So with the cancellation of the Ontario EV program it might be interesting to discuss and debate how EV incentives "should" be structured. As that discussion is off topic, thought I'd start up a thread where folks could throw in 2 cents and get flamed by the carbon lovers.

Here's my thought on the matter...

All jurisdictions seem to love the "instant" cash back price reduction, which I've always hated, even though I've indirectly benefited from such a plan.
It's just silly as it instantly artificially depreciates your car by however much rebate you just got, and only provides an incentive to the purchase of a new EV, when what we're really after is increased EV use, regardless of whether you buy your EV new or used. CO2 is only reduced when a km of ICE usage is replaced by a km of EV usage, therefore...

EV rebates should be structured as follows...

NO refund on the purchase price.

HST should be refunded on a per km driven basis. Set a rate per km, lets say for arguments sake a dime.

Refund should occur annually after the kms have been driven. (Most jurisdictions have annual inspections where they take the vehicle mileage at the time of the inspection so it's easy enough to calculate the km traveled.)
The maximum rebate on a particular vehicle would equal the HST paid on that vehicle and stay with the vehicle until the full rebate has been refunded.

This way if you buy your EV for $100,000 and the HST in your province was $13,000, that's the total rebate that would be returned based on the km driven, so (following the dime a km example) the vehicle would have 130,000 km driven on it before the owner got the last dollar. Each year the owner would get whatever portion of the rebate had been earned.

If the EV were sold before the total had been refunded, that value would still remain in the vehicle and be claimable by the subsequent owner(s) until it was completely used.

Result would be...
No instant depreciation,
No paying rebates for EV artwork sitting in driveways,
Used EVs passing the value to the future owners in the secondary market.
A government could put a time limit, though I'd prefer it be a very long one.

Post your own ideas, flame mine, whatever.

 

[darkenergy]

What an administrative nightmare.

The depreciation is a non-issue. The original purchaser benefitted and so does the secondary market. Everyone wins because it creates an affordable pool of zero emission vehicles. All those cars aid the environment. So don't try to dictate how people use their cars, focus on building the EV marketplace and creating a situation where the rebates are no longer required.

"unused" EVs is also a red herring. If people buy the cars they'll use them. Who cares if they use them more or less, it is no different than an ICE. Every dollar pumped into the EV marketplace grows the value for everyone. While I like the idea of incentivizing high mileage drivers, low mileage drivers are much less of a problem for the environment. High use individuals have more of an incentive to buy an EV anyway. More savings.

The last Ontario provincial rebate was excellent. It was:

• Equivalent (or really close) to other jurisdictions, excepting Norway, which has really high taxes on ICE anyway.
• Preferentially benefitted purchasers of cheaper EVs, helping to expand the market.
• Vendor agnostic.
• Supported less polluting solutions over partial solutions like PHEVs.
• Cut off super luxury cars and thus incentivized vendors to move down market.
• Simple (and cheap) to administer
• Simple to understand.

And it was funded from revenue coming from pollution sources.

It was a world leading program.

 

[felixculpas]

I disagree on many fronts but the first one that jumps at me is that in a few years, batteries will likely have reached the threshold that puts EV's at par with ICE vehicles so you don't want a program that has to be administered past that point in time.

Also from an administrative perspective, programs need to be kept as simple as possible. Not many people would look at something this complex as an incentive, period. Even with a good incentive, EV's penetration is only a few percent.

I would propose a $10k CDN federal tax rebate at point of purchase.

 

[S'toon]

I can't speak for anyone else, but I bicycle starting in spring, and continuing until it starts hovering around 0. I save money from not driving, and I need the exercise. Why should I be penalized for not driving?

 

[ewoodrick]

From someone down in the states....

Many states are starting to charge an additional fee for EVs. That's to support roads, for which the gas tax currently provides.
My state, Georgia had a $5,000 USD rebate that ended a few years ago. It totally killed the sells of the Leaf at that time. Of course with it, you could effectively lease a Leaf for $0 cost.
But sales are definitely recovering. We don't have the state rebate, but we do have the federal credit. But as we all know, the US Federal credit is getting ready to phase out (a lot slower than Ontario's)

The question that a government needs to ask is if some sort of subsidy is needed. Honestly, I don't think that many of the Model S or X sales would have been impacted by not having a credit. At $120,000, $7,500 is less than the state and local taxes on the car. So, is there a need to subsidize a purchase that only the "rich" can afford? Even the Model 3 is out of the range of the majority of car purchasers.

The base Model 3, the Leaf, Bolt, and a few other cars are priced just outside the reach of many middle class purchasers. This is where rebates/credits can do the most good.

As to a credit per mile, sounds like an idea, but you can't per mile until you buy a car. That's where a purchase credit becomes most valuable. Once purchased, you know that the driven miles are going to be better. Plus, doing per mile calculations over years is just a lot of work on everyone's part.

A lot of states do provide advantages to EV, like carpools. The use of extra lanes can be a huge incentive to some people in some locations.

 

[pcons]

From someone down in the states....

Many states are starting to charge an additional fee for EVs. That's to support roads, for which the gas tax currently provides.
My state, Georgia had a $5,000 USD rebate that ended a few years ago. It totally killed the sells of the Leaf at that time. Of course with it, you could effectively lease a Leaf for $0 cost.
But sales are definitely recovering. We don't have the state rebate, but we do have the federal credit. But as we all know, the US Federal credit is getting ready to phase out (a lot slower than Ontario's)

The question that a government needs to ask is if some sort of subsidy is needed. Honestly, I don't think that many of the Model S or X sales would have been impacted by not having a credit. At $120,000, $7,500 is less than the state and local taxes on the car. So, is there a need to subsidize a purchase that only the "rich" can afford? Even the Model 3 is out of the range of the majority of car purchasers.

The base Model 3, the Leaf, Bolt, and a few other cars are priced just outside the reach of many middle class purchasers. This is where rebates/credits can do the most good.

As to a credit per mile, sounds like an idea, but you can't per mile until you buy a car. That's where a purchase credit becomes most valuable. Once purchased, you know that the driven miles are going to be better. Plus, doing per mile calculations over years is just a lot of work on everyone's part.

A lot of states do provide advantages to EV, like carpools. The use of extra lanes can be a huge incentive to some people in some locations.

I have to say, I do agree with the statement that 120k cars (like the s and x) probably would not get impacted much by loss of a rebate.

I've been thinking about this a lot, mostly reading through the other longer thread on the Ontario rebates, but the statements made above also crystallized something in my mind:

I will definitely get heat for saying this here, but I believe the only EVs that should qualify for a rebate should be < say $50k....I say that because that would be the SR model 3 (when it comes out) bolt, leaf, ionique, volt, outlander, etc....ie, there are PLENTY of options in that price point, and the idea of the rebate is to gain market adoption.....

The typical sell price of a new car is ~$35k, so take a $45k EV and add a $10k rebate, and now people thinking of buying a civic can afford an EV. That's where I believe the best bang for the buck is.

Let's face it, the long range model 3 is a beast of a car, but it's price point is not what an average person can afford (even with the rebate the LR is still one heck of an expensive car for the average person)....full disclosure, I went ahead and ordered the AWD model knowing full well I had 0.0001% chance of getting the rebate.

I'm by no means a 'millionaire', but decided I wanted this car even without the rebate. I could have gone with a leaf or another EV that would have totally suited my requirements...but I wanted the refinement of the 3. If it was purely about saving the environment and driving electric, the leaf or a bolt would win hands down.

 

[felixculpas]

For some commuters, esp in the winter, the LR model 3 or equivalent is a necessity. I wouldn't be able to consider anything much less and I don't see why I should be penalized for that need when the result of adopting this EV would reduce more GHG's than for those commuting shorter distances if the spirit of incentives is simply to reduce said GHG's.

You can't roll out a program that's perfect. The more rules and conditions you introduce, the greater risk of penalizing someone that just wanted to help do their part.

I think the USA $7500 rebate was well done just that the winding down is a little premature.

To me, you have to look at what is driving the incentive to exist in the first place. If it's purely to reduce GHG's, I'm not a big fan of attaching "social" rules to it. It's most effective in achieving its mandate when applied universally. The spirit of the incentive and it's goals transcends any of these suggested rules.

I'd like to see a new federal program (in Canada) introduced similar to the one currently being proposed in the USA and with an incentive applied at point of purchase. No limit to numbers of vehicles sold. No limit to the cost of the vehicle. Reassessed on a yearly basis and reduced in relationship to the declining cost of batteries.

If you are really worried about the optics you could introduce a vehicle luxury tax based on the cost of the vehicle and tied to one's taxes which could then nullify the incentive for the rich while allowing a full rebate to those for which it was a stretch to buy that $110k vehicle.

EV incentives are only for a relatively short period in history if tied to battery costs. If this was some never ending scenario, you would want to administer it more tightly but I say let incentives do their work without barriers over the next few years.

 

[NoBeard]

So as a business decision, we need a new vehicle for delivering product.
Should be able to either fit 1000 lbs inside and tow another 5000 lbs or hold about 3000 lbs to make sense.
We look at cheap ICE delivery vans in the $40-50K range.
We look at combining some personal use eliminating a current personal vehicle and splitting the new vehicle between personal and business then we're at a say a Ford Expedition and max it out for comfort and electronics, we're at about $90K.
We look at a MB GLE550e with some PHEV capability, we're at $105K.
We look at a MX 100D, we're at $133K.
At the end of driving 150,000 km over the next few years, we've got around $22,500 in gas to spend and say another $5K in additional maintenance in either of the 2 ICE SUVs vs $23-38K in extra cost over ICE by going to a MX.

Aside from all the Warm Fuzzies one gets driving EV's (I've been doing so for 4 years without a rebate), by excluding such vehicles from the program and making a social program, puts more ICE on the road. Us in an EV will likely save many many times as much CO2 than the typical M3 driver.

What's the purpose of the program again?

 

[pcons]

So as a business decision, we need a new vehicle for delivering product.
Should be able to either fit 1000 lbs inside and tow another 5000 lbs or hold about 3000 lbs to make sense.
We look at cheap ICE delivery vans in the $40-50K range.
We look at combining some personal use eliminating a current personal vehicle and splitting the new vehicle between personal and business then we're at a say a Ford Expedition and max it out for comfort and electronics, we're at about $90K.
We look at a MB GLE550e with some PHEV capability, we're at $105K.
We look at a MX 100D, we're at $133K.
At the end of driving 150,000 km over the next few years, we've got around $22,500 in gas to spend and say another $5K in additional maintenance in either of the 2 ICE SUVs vs $23-38K in extra cost over ICE by going to a MX.

Aside from all the Warm Fuzzies one gets driving EV's (I've been doing so for 4 years without a rebate), by excluding such vehicles from the program and making a social program, puts more ICE on the road. Us in an EV will likely save many many times as much CO2 than the typical M3 driver.

What's the purpose of the program again?

That is a logical argument, and you do make some good points. However, in your case you would be using the car for business purposes and thus be able to write off a large majority of the purchase and use against the business. I have to think the number of people in a situation like that versus folks who just want a model X 'because' is probably relatively small.

I don't know the exact numbers, but I believe the overwhelming majority of the public looking to purchase a new vehicle have a budget of around 35-45k (possibly even less)....so my point is that is where the rebates should go first to maximize adoption. I believe that is the way to drive volume and drop the price of batteries, which is the point of the rebates.

The percentage of ~100k cars sold vs ~35k cars is likely very skewed, and I think it will be more likely to convert someone looking at a 35k ICE to an EV than a luxury car buyer, but again I'm not saying I'm right, just stating my opinion.

 

[kellogg76]

From someone in a province (NS) that gives absolutely benefit to having an EV, any incentive would be nice. Even if it just meant I can cross the bridge to Dartmouth for free it would be something!

In all seriousness though it has to be a national incentive, I tweeted with the Environment Minister about 2 years ago and was told "a national EV strategy is coming".

 

[NoBeard]

What an administrative nightmare.

Really?
A government that can track pretty much everything you do is incapable of doing the simple math of KM driven now minus KM driven since new?
In the Province I live in, we had a Diesel rebate (yeah, whatever) that sent me a cheque every year after I renewed the registration.
A kindergarten student with a crayon could handle the "administrative nightmare".

The depreciation is a non-issue. The original purchaser benefitted and so does the secondary market. Everyone wins because it creates an affordable pool of zero emission vehicles. All those cars aid the environment. So don't try to dictate how people use their cars, focus on building the EV marketplace and creating a situation where the rebates are no longer required.

Depreciation a non issue:
Unless you need to sell the vehicle within the time you still owe money on it. If you are "upside down" due to a rebate devaluing your purchase signicantly. I personally benefitted from the secondary market of a low mileage iMiev, so I've seen it go down.

Dictating how people use their cars:
Well, I suppose if you buy an electric car to show off to your friends that you can drive an electric car if you want to, then my plan might dictate, otherwise, it's simply spreading the rebate across the time you actually reduce CO2 emissions. Sit in your car and look pretty, get the rebate you deserve... Divert fuel burning into electric usage... get the rebate you deserve.

"unused" EVs is also a red herring. If people buy the cars they'll use them. Who cares if they use them more or less, it is no different than an ICE.

Seriously, no difference between an ICE sitting in the driveway vs an Electric, publicly funded car, in the driveway? Even if it were an insignificant number of people who bought and parked their EV's, the public perception of the program would be greatly enhanced by only paying per KM as the public would be able to see that the program was only paying for actual CO2 reductions, and have a minimal negative impact on the purchaser. The purchaser finances a higher amount, and gets a staged rebate to help pay for the financed amount. The public sees that the cars they've helped purchase for the "Millionaires" are actually being used to reduce CO2, not just being used as status symbols.

Every dollar pumped into the EV marketplace grows the value for everyone. While I like the idea of incentivizing high mileage drivers, low mileage drivers are much less of a problem for the environment. High use individuals have more of an incentive to buy an EV anyway. More savings.

So low mileage drivers who are less of a problem should get the same instant rebate as those who are actually trying to improve their impact on the environment. My commute used to be pretty intense when I lived near the center of the universe, I worked with people who walked to work. I guess giving the same incentive to the walker who leaves the car in the garage until the weekend makes sense.

The last Ontario provincial rebate was excellent. It was:

• Equivalent (or really close) to other jurisdictions, excepting Norway, which has really high taxes on ICE anyway.

Agreed

• Preferentially benefitted purchasers of cheaper EVs, helping to expand the market.

Not sure, we drive a cheaper EV, purchased without an incentive but benefiting indirectly from a badly managed one... not sure that the value being pumped into low mileage EVs is worthwhile. I know what our total mileage is across all our vehicles is right now, I know how much of that is in our EV, which we use as much as possible.

• Vendor agnostic.

Absolutely critical,

• Supported less polluting solutions over partial solutions like PHEVs.

Important, but also important is to look at the total reduction of CO2 in the environment and if a PHEV can do more reduction of CO2 than a parked EV, a balance must be struck. Yes, PHEV is a partial solution, but how is it not reducing the battery cost as much (or more) than a BEV? Lots and lots of orders for smaller batteries surely reduces the battery production price as much as a relatively few orders for large batteries.

• Cut off super luxury cars and thus incentivized vendors to move down market.

I guess you'd have to define "luxury cars". A Roadster, yes. A Rimac, obviously. An S or an X, nope. Not even close to "luxury". Won't get into the reasoning here unless you want to tangle on that one.

• Simple (and cheap) to administer

Government and simple/cheap to administer, had to LOL and ROFL there.

• Simple to understand.

Simple is not necessarily good.

And it was funded from revenue coming from pollution sources.

That's good, except that it takes money from the people at the bottom of the food chain who can't even afford a car as they pay though higher food prices, electric bills etc.

It was a world leading program.

Maybe, maybe not.

Anyway it's not a flame, just a different opinion from a business owner from a different jurisdiction in Canada that isn't the center of the universe.

The whole reason I started the thread to was to gather opinions and exchange concepts and ideas.

Cheers.

 

[jkirkwood001]

...Honestly, I don't think that many of the Model S or X sales would have been impacted by not having a credit. At $120,000, $7,500 is less than the state and local taxes on the car. So, is there a need to subsidize a purchase that only the "rich" can afford? Even the Model 3 is out of the range of the majority of car purchasers.

The base Model 3, the Leaf, Bolt, and a few other cars are priced just outside the reach of many middle class purchasers. This is where rebates/credits can do the most good.

As to a credit per mile, sounds like an idea, but you can't per mile until you buy a car. That's where a purchase credit becomes most valuable. Once purchased, you know that the driven miles are going to be better. Plus, doing per mile calculations over years is just a lot of work on everyone's part.

A lot of states do provide advantages to EV, like carpools. The use of extra lanes can be a huge incentive to some people in some locations.

Good thread, @NoBeard.

(I feel another poll coming on...

I like your idea @ewoodrick of a focus on lower cost cars (and thanks for pitching in with a US perspective). Why not put an incentive inversely proportional to the cost of the car, with lower cost EVs getting the most rebate? I know this sounds ludicrous (haha), but it would do several things:

1. It would incentivize manufacturers to build low cost EVs (vs. Tesla's model which pormotes luxury EVs) since those cheaper models would get more rebate and therefore be higher selling. This would surely accelerate (another pun!) the switch to EVs
2. "It would minimize rebates going to millionaires". We've heard the jibes. A rebate that did not give tax dollars to people who can afford to buy luxury cars is an improvement over the Ontario's "world leading" program just abandoned.
3. The manufacturers might not like it, but then, if they focus their resources on building simple EVs with targeted audiences, they can make money.
4. It would make it hard for the "old boys" manufacturers to take the easy road and just keep pumping out ICE Civics etc. If they get challenged by equally-priced EVs (with incentive), their path-of-least-resistance stay-the-course plan would be in jeopardy.

Thoughts?

 

[NoBeard]

I can't speak for anyone else, but I bicycle starting in spring, and continuing until it starts hovering around 0. I save money from not driving, and I need the exercise. Why should I be penalized for not driving?

How is it you are being 'penalized'. My suggestion was to simply defer you rebate until you use the car and reduce the CO2. You will eventually get the full rebate.

What's more,I really believe that those who do more fore the emissions like biking to work need some kind of a different incentive is important. Rebate on bikes?

 

[5_+JqckQttqck]

Well, with cap and trade gone... the next Federal Carbon Tax would be it... X$ per pound of CO2 reduced. EV owners would and should naturally get more of this tax pie since our transportation is CO2 free (unless there's coal/natgas electricity involved). The money from the ICE vehicles at the pump would dividend back to us forever and ever eventually (long time in the future) pay for the car. Anyone care to do the math on this model ?

 

[Phillip L]

Well, with cap and trade gone... the next Federal Carbon Tax would be it... X$ per pound of CO2 reduced. EV owners would and should naturally get more of this tax pie since our transportation is CO2 free (unless there's coal/natgas electricity involved). The money from the ICE vehicles at the pump would dividend back to us forever and ever eventually (long time in the future) pay for the car. Anyone care to do the math on this model ?

I am with you on this with a caveat. A carbon tax on fuel makes great sense but to mitigate the political fallout and the economic cost to citizens, give a rebate equal to the average amount collected to every tax payer. Let’s say the rebate is $500.00 a year, for arguments sake. You see an appreciable increase in the cost of the fuel every time you fill up, knowing you get it back later. But you also know that if you buy a more fuel efficient vehicle, especially an ev, you still get the rebate. If you still drive a real gas guzzler, you pay the extra at the pump. So the incentive is there to buy as little fuel as possible. People who do not own a vehicle still get the rebate to offset the added cost of public transit. Basically the carbon tax cheque in the mail each year serves to push people to buy an ev, or at least use less fuel; is a great advertisement for ev’s; and shows the net negative impact of the policy to mitigate the political risk to the government.

 

[Velianou]

In order to make it as least complicated for all including Government, manufacturer and the buyer, I would do the following:

1. GST on all PHEV and BEV and Hydrogen at POS
2. $7000 on all BEV
3. $3500 on all PHEV
4. ? $ on Hydrogen
5. To be filed as tax credit

This would minimize the administration of the program. While filling in the tax line you would have to put your VIN. VIN's would have to be submitted by the manufacturer to Federal government for auditing purposes.

Just my thoughts