40% of the carbon emissions in the state of Oregon come from transportation. Following in the footsteps of its neighbor to the south, it has adopted the zero emissions vehicle plan initiated by the California Air Resources Board which calls for all new passenger vehicles to be battery powered by 2035. Oregon also has one of the more aggressive EV rebate programs of any state. That program pays anyone who buys a qualifying electric car — the maximum sales price is set at $50,000 — a rebate of $2,500 which is available at the time of purchase directly at the dealership.
In addition, buyers who meet certain income guidelines can qualify for an additional $5,000 rebate and that rebate may apply to the purchase of a used electric car as well. The Oregon program is among the most progressive in terms of addressing the needs of low and moderate income drivers.
Oregon EV Rebate Program Runs Out Of Money
The rebate program began in 2018 and has paid out about $71 million to electric car buyers since then. It is paid for in part by the state’s vehicle privilege tax levied on car dealerships. The Oregon Department of Environmental Quality estimates it will receive about $14 million from that source of tax revenue in 2023. The budget for both programs in 2023 is $17.5 million with $15.5 million available for rebates.
However, the program have been a victim of its own success. The DEQ will temporarily suspend the Oregon Clean Vehicle Rebate program starting May 1 until funds for the program are replenished next year, according to Oregon Public Broadcasting. This is the first time DEQ has paused its rebate program since it began. Rachel Sakata, senior air quality advisor for DEQ, said the program is getting too popular as more people turn to EVs.
“Unfortunately, we’ve become a victim of our own success and we’re running out of money,” Sakata said. “That means that any electric vehicles that are purchased or leased prior to April 30 can still receive a rebate in 2023, but any purchases or leases after May 1 will not be eligible.”
Residents who do purchase an EV on or before April 30 will still have six months to apply for the rebate. However, if funding runs out, residents will be put on a waiting list and receive rebates once the program is replenished. DEQ estimates the suspension will be lifted in March 2024, or earlier if the program receives additional funding for 2023.
Rising EV Sales
The suspension of the rebate program comes as sales of electric cars in Oregon have been increasing. The state is ranked second in the nation after California for the share of new vehicles sold that are electric. Oregon is also investing millions toward increasing the number of electric vehicle chargers along major roadways and in rural areas.
“What we’re really seeing is that EV adoption is increasing,” Sakata said of the DEQ program running out of funds. “It’s great to see such an explosive growth in the program.” Despite the program being on hold, Sakata said Oregon residents who want to purchase an electric vehicle after May 1 can still get help through the federal government. Qualifying households can apply for up to $7,500 in federal tax credits, depending on the vehicle purchased.
Forth Mobility advocates for access to clean transportation options for low income people in Oregon. Executive director Jeff Allen said the suspension could have not come at a worse time, as data show more Oregonians are making the switch to electric vehicles. He said the suspension likely will affect low to moderate income households who would benefit the most by purchasing an EV. “It’s absolutely terrible that this rebate program is being suspended,” Allen said, adding he expects “an enormous chilling effect” on EV adoption as a result.
Forth has been a leader in helping residents switch from gas-powered vehicles to electric by providing outreach and education on how the vehicles work and what incentives exist. Allen said his group was part of a coalition that designed the rebate program in 2017. Since then, he said, the program has been a model for other states. “I think really the problem is just that people underestimated how popular this program was going to be, which is a great problem to have,” he said.
According to Oregon DEQ’s clean vehicle rebate coordinator, Erica Timm, the projected costs to cover the program will only become more expensive as Oregon gets closer to 2035. “The number for next year for example, is an estimated $33 million to cover the costs . But if we were to look out to, say, 2030, we were looking at the projected cost could be over $91 million a year.”
That’s the exact amount legislators are asking for in House Bill 2613, which would declare an emergency and allocate money from the state’s general fund to DEQ on July 1. Representative Susan McClainis is a chief sponsor of the bill. She said suspending the rebate when EV prices are rising will only increase barriers for Oregonians. She also called the pause “a huge step backward” for Oregon’s climate goals.
Allen agrees. “We need the governor and Legislature to act quickly to fund this program and either prevent this suspension or end the suspension as quickly as possible,” he said. If the bill is passed, Allen said, it would provide an opportunity for Oregon to think more thoroughly about what the rebate program needs to be in order to be successful and avoid future suspensions.
EVs & Rebate Programs
The situation in Oregon may make this a good time to reflect on EV rebate programs in general. We at CleanTechnica are huge supporters of electric transportation, yet we often wonder if offering people money to buy an electric car is the most efficient use of public dollars. Call us cynical, but we notice that when the rebates disappear or are reduced, the retail prices of electric cars fall by an equivalent amount. That leads us to suspect that much of the money spent by those rebate programs winds up in the pockets of manufacturers.
Perhaps the funds used for rebate programs could be invested more wisely and with greater impact on the EV revolution by building out EV charging networks so the people who decide to drive an electric car don’t have to worry about running out of battery power while away from home. Range anxiety is real and it may keep more people from driving electric than the cost of the cars themselves.
We are not government policy makers nor have we ever played them on TV, but we think it is important to ask what is the best and most efficient use of taxpayer dollars when it comes to promoting the EV revolution. We suspect our readers may have an opinion of two on this topic and look forward to reading them in the comments section.
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