Connecticut is trying to put tens of thousands more electric vehicles on the road in the coming years to help tackle climate change and build a green economy.
But its Connecticut Hydrogen and Electric Automobile Purchase Rebate (CHEAPR) program last year allotted only a few hundred rebates, with its output dropping precipitously from 2019. State officials are hoping, however, that this year marks the start of a comeback, with a number of changes aimed at expanding the program’s reach.
“It might sound strange to say that the program is both underspent and underfunded, but if it were more aggressively positioned then the funds would be utilized,” Barry Kresch, who serves as the president of the EV Club of Connecticut and bought a Chevy Volt with a CHEAPR rebate, said during testimony March 3 to the state legislature’s Transportation Committee.
The Connecticut Hydrogen and Electric Automobile Purchase Rebate (CHEAPR) program provides subsidies for the purchase and lease of electric vehicles. While the program grew in its first few years, it experienced a major downturn in 2020.
Total rebate dollars distributed
Total number of rebates awarded
Source: Connecticut Department of Energy and Environmental Protection
Launched in 2015, CHEAPR provides incentives for Connecticut residents who purchase or lease new battery-electric, plug-in hybrid electric or fuel-cell electric vehicles.
More than 30 vehicles qualify for rebates, although eligible cars’ manufacturer-suggested retail prices cannot exceed $42,000 for battery-electric and plug-in hybrid models or $60,000 for fuel-cell cars. Rebates are limited to one person or two per organization.
The state Department of Energy and Environmental Protection manages CHEAPR. The program receives $3 million in annual funding, which comes from fees for new vehicle registrations and vehicle registration renewals.
After expanding its reach in its first few years, CHEAPR struggled in 2020. Rebate dollars distributed through the program dropped more than 70 percent from 2019 to about $723,500, while the number of rebates plunged nearly 60 percent to 675.
“The pandemic is probably the biggest impact because that drove down light-duty vehicle sales, and you see EV sales drop — but not as much,” Paul Farrell, DEEP’s director of air planning, said in an interview. “COVID also led to some of the manufacturers looking at their production levels and model availability. You had some models going out that just weren’t available anymore that were fairly popular, like the Chevy Volt.”
Reflecting the dwindling demand, CHEAPR expended last year only about 30 percent of its $3 million allotment. The unspent $2.1 million has been rolled over into the program’s 2021 budget.
CHEAPR’s travails reflects the difficulty Connecticut faces in reaching its electric-vehicle goals, as it tries to reduce automobile emissions. Connecticut suffered from “some of the worst air quality in the country,” and the transportation sector accounted for 38 percent of its greenhouse-gas emissions, according to the “Electric Vehicle Roadmap” published last year by DEEP.
State officials are aiming to help put 125,000 to 150,000 electric vehicles on the road in Connecticut by 2025. But as of Jan. 1, there were only 13,800 EVs registered in the state, according to the state Department of Motor Vehicles.
“We’ve made some good progress with the CHEAPR program, but it’s simply insufficient and consistently underfunded,” state Rep. Jonathan Steinberg, D-Westport, a Transportation Committee member, said last month. “If we’re really going to move the needle, we need to enable working-class people to get EVs, probably previously owned and certainly subsidized.”
In another effort to spur greater use of electric vehicles, Steinberg and state Sen. Will Haskell, D-Westport, have introduced a bill that would allow EV manufacturers such as Tesla to directly sell their automobiles to Connecticut customers without operating franchised dealerships.
Ideas for improvement
Responding to the criticism, DEEP is planning to institute this year several changes to make CHEAPR’s subsidies more accessible.
The CHEAPR board approved last month a revised group of incentives, which include — for the first time — rebates for used electric vehicles.
Under the new parameters, base incentives for new and used electric vehicles will range from $500 to $5,000. In addition, there will be supplemental new-vehicle incentives, ranging from $1,500 to $2,000, for low-to moderate income applicants. DEEP also expects to offer an additional “economic stimulus incentive” that will be available from the launch of the new stage of the program in April through December.
“We’re incredibly excited about this new opportunity to increase and broaden the program to the low-to-moderate-income community and make the program more equitable,” Farrell said. “We’re hopeful that in conjunction with the COVID vaccines and the economic recovery… instead of having limited vehicle availability and limited sales, we’ll see increases across the board.”
Car dealers are also committed to the program. Connecticut Automotive Retailers Association officials said that they assisted DEEP in creating CHEAPR and work with the department on providing updates to dealerships and facilitating CHEAPR-related training.
“CARA supports expanding the program to include rebates for used electric vehicles and to provide enhanced rebates that will open the market to a broader range of buyers,” said CARA President Sarah Fryxell. “The amount of EVs sold in Connecticut continues to grow, which is a testament to the commitment of locally owned dealerships’ to meeting the needs of our customers and to Connecticut’s clean air efforts. We look forward to an improved CHEAPR program.”
The EV Club of Connecticut’s Kresch said he supports those new “equity provisions,” but that he still wants to restore former rebate and price parameters. Among changes implemented in October 2019, the price limit for battery-electric and plug-in hybrid electric vehicles was lowered from $50,000 to $42,000. DEEP officials said those changes responded to a program spending rate that would have exceeded available funding at that time.
CHEAPR’s board voted last month to maintain the $42,000 price cap.
“My larger concern about CHEAPR is that it has been underperforming for the past year and a half,” Kresch told the Transportation Committee. “While there has been a pandemic and recession, the main reason [for last year’s decline in rebates] was the changes in the program parameters dating to October 2019.”
Among other efforts to improve CHEAPR, the Transportation Committee approved this week a bill that directs CHEAPR’s board to launch a study to “ensure the equitable distribution” of grants. The study results would be due to the committee by Feb. 1, 2022.
DEEP officials said that they would have preferred to submit in January 2023 a summary of the CHEAPR incentives, a timeframe that they said would allow them to assess the impact of the new components.
“We just don’t think you need a study at this point,” Farrell said. “Let’s unleash this program, let’s see what happens. Let’s get some data, and let’s see how we’re doing.”
Amid the push for more electric cars, Kresch and other constituents have suggested adding other types of subsidies.
In the March 3 hearing, Kate Rozen called for the launch of a pilot program that would offer incentives for e-bikes and e-mopeds, focusing on low-to-middle-income households. In 2019, Rozen purchased an electric cargo bike to commute from Woodbridge to New Haven.
“I don’t believe we can achieve those [CHEAPR] goals by excluding the electric bicycle,” Rozen said. “The cost to leave out a whole mode of electric transportation is way too high for city residents suffering from pollution of our car-centric world. The electric bicycle should be held up as commensurate to the electric vehicle in our climate and health toolkit, particularly because of its lower cost of entry.”
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