New Jersey’s ChargeUp electric vehicle rebate program is an unqualified success. By providing an on-the-hood rebate to buyers, New Jersey significantly increased the sale of electric vehicles. Remarkably, during a global pandemic, the program in its first year ran through a year’s worth of funding in three months. Many prospective buyers waited nine months for the program to reopen and, when it did, it ran out of funding again — this time after only 10 weeks.
New Jersey law sets the goal of having 330,000 electric vehicles registered in the state by 2025. It’s about more than a law. Studies continue to definitively show that that if we don’t reduce greenhouse gas emissions — dramatically and soon — our way of life is imperiled. This is especially true in New Jersey, where rising sea levels pose a severe threat to coastal communities. Electrifying our vehicles, as soon as possible, is a key strategy in reaching our goals of reducing greenhouse gas emissions that worsen the impacts of climate change.
As New Jersey’s state Energy Master Plan outlined and as its Integrated Resource Plan, the analytical exercise that underpins the plan, showed, moving to electric transportation is a necessary piece of the puzzle.
So it comes as a surprise that, just as we’re at the beginning of some measure of success, the state wants to cut rebates by half. What’s that about?
New Jersey has emerged as a national leader in this market, offering rebates of up to $5,000 cash for eligible electric vehicles; those with a manufacturer’s suggested retail price from $45,000 to $55,000 receive a $2,500 incentive and those selling for less than $45,000 receive $5,000. With this rebate level, we’ve hit the rate of sales needed to get those 330,000 cars on the road; today, over 40,000 electric vehicles are registered. The rebate is working just as intended.
But, despite the urgency the climate crisis demands and a program that is proven to be effective, the state’s Board of Public Utilities now wants to put in place a structure that will make it harder to reach the goals the law requires. The really bad news is it proposes to cut the rebate in half — a drastic reduction that isn’t substantiated by any market need or study — and slam the brakes on progress to date.
A losing strategy
Make no mistake about it — prices on electric vehicles are coming down. Rebates won’t need to be a forever program for New Jersey. But the fact exists that electric cars today cost $10,000 to $15,000 more than equivalent cars with internal combustion engines. Couple the $5,000 state rebate with the maximum federal tax incentive of $7,500 available for many of these vehicles and you start to close the price gap by enough to promote behavior that results in more electric vehicles on our roads. States that offer a $2,500 incentive don’t deliver the results New Jersey needs; they simply don’t advance the market. Reducing rebates by such a significant amount in such a short period is a losing strategy.
Further, in today’s economy of supply constraints driven by COVID-19-induced global supply disruptions and a computer chip shortage, this higher level of rebate entices manufacturers to bring their EV products to New Jersey.
So why would the state want to roll the dice and downsize a program that’s delivering the results needed to meet our climate obligations and are part of Gov. Phil Murphy’s green economy strategy?
Just when we’re getting somewhere
Don’t we want to lead?
It is not a question of not enough money in the state budget. It’s a question of priorities. New Jersey’s EV law provides the BPU with budget flexibility in its establishment of the rebate program: at least $30 million per year for 10 years. ChargEVC’s analysis finds that we will need $40 million in additional funding to keep the program open through the end of the current state fiscal year — June 30, 2022 — and stay on track to hit our goals.
Depending on how vehicle prices move, we might not need a full 10 years of rebate support and certainly we expect the current levels of support to move down when EV prices decline. But we do need to maintain rebate levels now — in the early years of EVs — or there’s no hope of getting where we need to be in the fight against climate change. At the beginning of this journey, let’s not rip the road out from under us just when we’re getting some traction.