Home » News » Should EV incentives be limited to cheaper EVs?


Californian senator Gaines is in the process of trying to limit the Californian tax rebate on the purchase of EVs, to only those that cost less than $40,000. The EV that would potential be most effected by this is of course Tesla, whose cars often sell for more than $100,000.

On the face of it this might seem like a sensible decision, after all, if someone can afford a $100,000 car, they don’t need a $2,500 tax rebate do they?

My fear is that this sort of value limit placed on EV buying incentives could spread, in particular to the UK where I live. Here the government gives a £5,000 grant to anyone buying an EV. You never actually get the money, the dealer simply knocks £5,000 off the price of the car.

I feel these sort of limits are a mistake, here are my reasons.

Not everyone who buys an expensive EV is price insensitive. Some people really want to drive an EV, some for environmental reasons, some just because they prefer the driving experience, but quite a few people actually need a sensible go anywhere range, that’s something only the Tesla can provide at the moment. However if the car was any more expensive they wouldn’t be able to afford it at all. The more people that drive EVs, the greater the immediate positive impact on the enviroment and also the quicker manufacturers will get to the point that long range EVs become affordable for almost anyone.

Another important point is that the more people who buy expensive EVs now, the more second hand cars will be available in a few years time, at a large discount to the price of a new one. Also there will be more ex-EV batteries available for things like off grid installations and to balance power produced from renewable sources.

As far as I can see there is only one possible valid reason for restricting the availablity of these incentives and that is if they really had no impact on the volume of EV sales. As it happens I have personal experience that contracts that particular statement. I had a Nissan Leaf and needed something with more range, the only game in town was Tesla. So even though it almost twice the price of any ICE that I would ever contemplate buying, I decided to take the plunge, having calculated that if I keep it long enough the petrol savings should make a fairly good value proposition. Now if it had been £5,000 more expensive then I probably wouldn’t have been able to make the stretch. From discussions on various forums I’m led to believe that I’m not the only one in this situation, sure there are some for whom £5,000 makes no difference, but there are other who are more price sensitive. This is probably only the case for EVs where the vehicle that is being purchased actually has a reasonable chance of being a practical daily driver. If someone is looking for an expensive EV toy, like a Tesla Roadster or the new Audi R8 etron then perhaps the grant isn’t needed, after all toys are by definition not essential, being able to drive to your parents house at the weekend however is more neccessary.

Hopefully there won’t be a cap on the value of EVs that qualify for these sorts of grant and tax rebates, but only time will tell.


One thought on “Should EV incentives be limited to cheaper EVs?

  1. Wow that was odd. I just wrote an extremely long comment but after I clicked submit my comment didn’t appear. Grrrr… well I’m not writing all that over again. Anyways, just wanted to say excellent blog!

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