Op-Ed: Why reduce the NJ discounts for electric vehicles?
New Jersey’s ChargeUp electric vehicle rebate program is a huge success. By offering a discount on the hood to buyers, New Jersey has dramatically increased the sale of electric vehicles. Remarkably, during a global pandemic, the program in its first year received funding for one year in three months. Many potential buyers waited nine months for the program to reopen, and when it did, it ran out of funding again – this time after just 10 weeks.
New Jersey law sets the goal of having 330,000 electric vehicles registered in the state by 2025. It’s more than law. Studies continue to definitively show that if we don’t reduce greenhouse gas emissions – dramatically and soon – our way of life is in jeopardy. This is especially true in New Jersey, where rising sea levels pose a serious threat to coastal communities. Electrifying our vehicles, as soon as possible, is a key strategy to achieve our goals of reducing greenhouse gas emissions which exacerbate the impacts of climate change.
As the New Jersey State Energy Master Plan and Integrated Resource Plan pointed out, the analytical exercise behind the plan has shown, the shift to electric transmission is a necessary part. of the puzzle.
It is therefore surprising that, just as we are at the beginning of some success, the state wants to cut the discounts in half. What is it about?
New Jersey has become a national leader in this market, offering discounts of up to $ 5,000 in cash for qualifying electric vehicles; those with a manufacturer’s suggested retail price between $ 45,000 and $ 55,000 receive an incentive of $ 2,500 and those selling under $ 45,000 receive $ 5,000. With this level of discount, we have achieved the sales rate necessary to get those 330,000 cars on the road; today, more than 40,000 electric vehicles are registered. The discount works as expected.
But, despite the urgency demanded by the climate crisis and a program that has proven to be effective, the State Board of Public Utilities now wants to put in place a structure that will make it more difficult to achieve the objectives required by law. . The very bad news is that he is proposing to cut the discount in half – a drastic reduction that is not justified by any need or market research – and to hold back progress to date.
A losing strategy
Make no mistake, prices for electric vehicles are dropping. The rebates don’t need to be an eternal program for New Jersey. But the point is, electric cars today cost $ 10,000 to $ 15,000 more than equivalent internal combustion engine cars. Pair the $ 5,000 state rebate with the maximum federal tax incentive of $ 7,500 available for many of these vehicles and you begin to narrow the price differential enough to promote behavior that results in more vehicles. electric on our roads. States that offer a $ 2,500 incentive are not delivering the results New Jersey needs; they just don’t move the market forward. Reducing the discounts by such a large amount over such a short period is a losing strategy.
Additionally, in today’s economy of supply constraints driven by COVID-19-induced global supply disruptions and a shortage of computer chips, this higher discount level is an incentive for manufacturers to bring their EV products into the market. New Jersey.
So why would the state want to roll the dice and scale down a program that is delivering the results needed to meet our climate obligations and that is part of Governor Phil Murphy’s green economy strategy?
Just when we get somewhere
Don’t we want to lead?
It is not a question of lack of money in the state budget. It is a question of priorities. The New Jersey Electric Vehicle Act gives BPU budgetary flexibility in setting up the rebate program: at least $ 30 million per year for 10 years. ChargEVC analysis reveals that we will need $ 40 million in additional funding to keep the program open until the end of the current fiscal year, June 30, 2022, and stay on track to meet our goals. .
Depending on how vehicle prices evolve, we may not need a full 10 years of discount support and we certainly expect current levels of support to decline when EV prices fall. But we have to maintain discount levels now – in the early years of electric vehicles – or there is no hope of getting where we need to be in the fight against climate change. At the start of this journey, let’s not tear ourselves off the road just as we get traction.