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Canada

Reducing EV rebate means less but for more buyers in B.C.

Reducing the rebate for buyers of new electric cars to $3,000 will extend the incentive program to an additional 3,800 vehicles, according to the B.C. Energy Ministry.

An “unprecedented” demand for a provincial rebate for buyers of new electric cars of up to $5,000 led to the government dropping the rebate to $3,000.

“B.C. has the highest uptake of new electric vehicles in Canada and our recent incentive program has seen huge success — more than we anticipated,” a B.C. energy ministry spokesman who asked not to be named said in an email.

He said the demand was caused by the success of the provincial program, the introduction May 1 of a federal incentive program that provided up to $5,000 in incentives, increasing public awareness, and an increasing number of charging stations.

With the drop to $3,000 from the province, EV buyers are still eligible for a total of $8,000 with the federal incentive, he said. There was an additional $6,000 available through the private Scrap-It B.C. program but all that money has been granted for the year and getting all three rebates was rare.

The province has had to top up its incentive program to meet the demand for the incentives, which are available to individuals, business, non-profits and local governments. The ministry didn’t break down the percentages that went to businesses versus consumers, saying only “The majority of incentives have been allocated to individuals, not fleets.”

The New Car Dealers Association of B.C., which administers the rebate program, the drop will stretch the incentives to more potential buyers, said CEO Blair Qualey. He said the combined provincial-federal rebate is “still significant” but it’s too early to tell if the drop will affect sales.

Matthew Klippenstein, electric vehicle industry analyst and EV adviser for Plug In B.C., said he wasn’t surprised the province had to trim the rebates after EV sales hit six per cent in the first quarter this year because the rebates were originally designed to get EV sales to five per cent of the market.

He said they may have hit 10 per cent of all sales in May, after the federal rebate was offered.

“Everybody started buying EVs,” he said in an email. “And why not, they were getting an extra discount of $5,000.”

As an advocate for more EVs, he is “wary” of complaining about the cut when that could annoy cycling and transit advocates or drivers of large pickup trucks or SUVs, who don’t have an EV choice.

In response to studies that have shown buyers of new EVs tend to be wealthy, the province said dropping the price of eligible EVs to $55,000 from $77,000 “will ensure that the program supports the most affordable EVs” and “help extend the funds” to more buyers.

A University of California at Berkeley study that found 83 per cent of those who received the rebates in the U.S. made more than $100,000 US a year, according to U.S. economist Julianne Malveaux. She wrote recently l that it was unfair “for all taxpayers to pay for luxury vehicles enjoyed by a small fraction of taxpayers” and called for an end to this “subsidized inequality.”

And another study of EV rebate programs in the U.S. found that new purchases of EVs are not replacing older gas-guzzlers.

“Our results suggest that vehicles that EVs replace are relatively fuel-efficient: EVs replace gasoline vehicles with an average fuel economy of 4.2 mpg above the fleet-wide average and 12 per cent of them replace hybrid vehicles,” according to a National Bureau of Economic Research working paper called What Does an Electric Vehicle Replace published in April.

“Federal income tax credits resulted in a 29 per cent increase in EV sales, but 70 per cent of the credits were obtained by households that would have bought an EV without the credits,” said the authors, from Cornell and Peking universities.

Klippenstein admitted “the optics are terrible” if the rebates go to “people who are already rich.”

Half of new car sales each year are used vehicles, which don’t get rebates, because “many people aren’t even rich enough to buy new cars,” he said.

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