California Pulls the Plug on Electric Car Subsidies for the Rich

Residents making more than $500,000 would lose a tax break on their Teslas, meaning more rebates for low-income drivers.

A Tesla Roadster. (Photo: Flickr)

Aug 25, 2015· 1 MIN READ
Taylor Hill is an associate editor at TakePart covering environment and wildlife.

For the past five years, Californians have been eligible for thousands of dollars in state rebates when purchasing an electric car.

Not anymore, at least for the wealthy.

The California Air Resources Control Board has proposed imposing an income cap on electric car tax subsidies, meaning households earning $500,000 or more can no longer cash in.

Critics have long bashed the program for giving the rich cash so they can buy six-figure luxury electric supercars like the Tesla Motors Model S, leaving less money for low-income and middle-class drivers.

A survey from the Center for Sustainable Energy, which runs the state’s clean vehicle rebate program, shows that the program has issued more than $217 million in rebates to electric car and plug-in hybrid owners since 2010. Of the 15,432 survey respondents who received a rebate, only 6 percent had a household income below $50,000.

Nearly 60 percent of zero-emission car buyers had a household income over $125,000, and 27 percent made more than $200,000. Households earning $500,000 or more represented 5 percent of those surveyed.

Kris Vosburgh, executive director of the Howard Jarvis Taxpayers Association, told the Los Angeles Times that the subsidies for high earners amount to “welfare for the rich” and “a slap in the face to average Californians.”

But in its 2015 funding plan, the Air Resources Board contended that the decision to keep subsidies intact for the wealthy was mainly to pump up the nascent electric car market.

The state is pushing to put 1.5 million zero-emission vehicles on the road by 2025.

“Staff considered a recommendation for a household income threshold of $400,000, but is concerned that if the limit is set too low it would limit growth of the ZEV market at this key early stage,” according to the plan.

RELATED: Putting Low-Income Drivers Behind the Wheel of Electric Cars

Some of the ways it’s keeping that momentum is through a state-funded ride-sharing program in Los Angeles that puts low-income residents behind the wheel of carbon-free transportation.

Under another proposal, California would calculate the size of the rebate according to income rather than just paying a flat $1,500 for a hybrid plug-in and $2,500 for an electric vehicle. Now, individuals with an income less than $35,000 and households earning less than $60,000 get $3,000 for plug-in hybrids and $4,000 for electric vehicles.

With cheaper zero-emission cars coming on the market, the hope is that more lower- and middle-income buyers will go electric.