Tackling the electric vehicle buyer gap

Electric car sales skew toward the wealthy. Can stronger incentives and better program design change that?
By Emma Foehringer Merchant

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In 2018, U.S. consumers drove about 17 million new cars off dealership lots. But more than double that number bought used cars — from neighbors, used car dealerships or marketplaces like Craigslist.

Proponents of electric vehicle adoption are encouraging states to consider this trend when designing EV incentive programs to help the country rapidly decarbonize transportation. As the U.S. looks to move beyond the wealthy buyers that drove early EV adoption, advocates and researchers say that means targeting incentives to appeal to less affluent consumers and more affordable models — pre-owned Nissan Leafs and Chevrolet Bolts rather than flashy Teslas.

I think we can comfortably say that we should no longer be subsidizing wealthy people’s Teslas,” said Hana Creger, senior program manager for climate equity at the Greenlining Institute, a California-based economic and environmental justice organization. We should really be prioritizing those folks who have the largest barriers to accessing clean vehicles.”

Thus far, federal tax credits have been one of the main drivers behind U.S. growth in electric vehicles, helping EVs on U.S. roads grow from a handful at the start of the last decade to more than 1 million in its later years. But tax credits have favored the rich since they require a buyer to accrue a certain amount of owed taxes to take advantage of them. Meanwhile, due to barriers such as upfront cost or access to credit and vehicle chargers, electric vehicles remain out of reach for many.

Many supporters of transportation electrification want to see more positive impacts from those technologies in communities of color and low-income communities, which are disproportionately harmed by climate change and have endured greater exposure to air pollution due to discriminatory policy and the siting of infrastructure like highways and power plants in their neighborhoods.

The California model

California accounts for nearly half of U.S. electric vehicles sales and has zero-emission vehicle requirements dating back to 1990. It represents an early example of the types of incentive programs that could bolster electric vehicle accessibility.

The state has several low-carbon mobility programs, centered on sectors such as schools, freight and trucks. It’s apportioned more than $1 billion to programs to shift drivers of small vehicles to clean cars. Last year, California Gov. Gavin Newsom said the state would wean itself off gas-powered cars by 2035.

That sets California up as a potential model for the future of mobility, said the Greenlining Institute’s Creger. But she also points to concerns with the state’s priorities: California has disbursed more than $800 million into its EV rebate program, a first-come, first-served pot of money, while sending less than $125 million to recipients of its equity-focused programs, called Clean Cars 4 All and the Clean Vehicle Assistance Program. And all of California’s programs have experienced more demand than they can meet.

Incentive programs designed to prioritize lower-income individuals can have significant impact, according to recent analysis. Ninety-two percent of funding distribution for California’s Clean Cars 4 All program has gone to what the state defines as disadvantaged communities or low-income communities and households, the state said in an April report. That’s compared to just 34 percent for the rebate program, although the state implemented an income cap for applicants in 2016.

Applying incentives to used electric vehicles, as some of California’s programs do, can also allow families receiving the high end of the state’s incentives to save 30 to 40 percent on ownership costs compared to the purchase of a comparable used gas car for certain model years, according to new research from energy policy firm Energy Innovation.

At least to my knowledge, I’m not aware of any other climate or energy policy that produces that big of a household budget benefit,” said Chris Busch, Energy Innovation’s director of research and the report’s author.

Looking beyond the car

U.S. households spend more on transportation costs than any other expenditure category besides housing costs, according to 2019 data from the Bureau of Transportation Statistics. Transportation emissions also account for the majority of California’s air pollution in a state whose culture is virtually synonymous with highways and driving.

We have created a car-centric transportation system in this state [and] in this country,” said Daniel Sperling, the founding director of the Institute of Transportation Studies at the University of California, Davis. Electric vehicles, both cars and trucks, are the number-one strategy for decarbonizing the transportation system.” Transportation electrification, along with renewable electricity generation, are the two most important policies that California is pursuing for greenhouse gas reduction.”

The new federal administration also has big plans for expanding electrified transport in service of climate goals. President Joe Biden set aside $174 billion to boost EV adoption, manufacturing and charging in his infrastructure proposal now being debated in Congress. Those funds would help build half a million charging stations and offer rebates and tax incentives for the purchase of U.S.-made electric vehicles.

California has provided grants or vouchers to defray upfront costs — an intractable barrier to EV purchases — for its accessibility-focused vehicle programs. Greenlining’s Creger also pointed to the importance of employing case managers to help applicants move through the red tape that can hinder government programs and prioritizing opportunities for job creation associated with incentive programs — another focus of the Biden administration.

Ultimately, though incentives can boost access in the short term, many proponents of transportation electrification say policies will have to look past electric vehicles and toward more flexibility. Some California programs allow people trading in gasoline-fueled cars to receive a voucher not for an electric car to replace it, but for other transport options such as public transit or car-sharing — a step toward expanding electric mobility options that advocates say will eventually be as important as expanding accessibility to electric cars.

We have to be thinking way beyond electric vehicles; we need a comprehensive mobility approach,” said Creger. We need to be thinking about electric car-sharing, electric bike-sharing, community-driven mobility — solutions and approaches that are not as prescriptive as electric vehicles are.” In other words, we really have to completely restructure and reform the way that we do transportation planning.”

Emma Foehringer Merchant is a former staff writer for Canary Media. She has covered clean energy and climate change at publications including Greentech Media, Grist and The New Republic.