By BRETT ROWLAND
THE CENTER SQUARE
(The Center Square) – A Texas program that gives out millions of dollars in taxpayer-funded rebates for new electric vehicle purchases is under scrutiny for subsidizing affluent people who buy luxury cars. One analyst is calling for the program to end.
One person received a $2,500 rebate through the program after buying a Porsche 918 Spyder, a limited production hypercar with a base price of $845,000. That car, which has a top speed in excess of 200 mph, has a range of just 12 miles in all-electric mode, according to the U.S. Environmental Protection Agency.
Another Texas resident was reimbursed $2,500 for buying a Karma Revero GT. The 2021 version of that sports car has a sticker price of between $144,800 and $152,800, according to Edmunds. Other cars bought through the program include 12 BMW i8 electric sports cars, a Land Rover Range Rover and other luxury vehicles.
Nearly 20% of the $14.3 million in grants given out through the state’s Light-Duty Purchase or Lease Incentive Program went to luxury car buyers. Buyers of vehicles from luxury automakers Audi, BMW, Cadillac, Jaguar, Land Rover, Lincoln, Mercedes-Benz, Porsche and Volvo got combined rebates of $2,784,528. That’s 19% of the total amount of the grants awarded through the program from 2014 to 2021.
Studies show those likely to buy an electric vehicle have an annual median household income of $95,000. BlastPoint, a data analytics company in Pennsylvania, reported that its research found about 25% of likely buyers of electric vehicles have an annual household income above $150,000 a year.
The median household income in Texas in 2020 dollars from 2016 to 2020 was $63,826, according to the U.S. Census Bureau. The average price for a new electric vehicle was $56,437 in November 2021, about $10,000 higher than the average new vehicle price industry wide of $46,329, according to Kelley Blue Book.
The rebate program gave out more than $14.3 million in taxpayer-funded rebates to people who bought or leased 5,931 vehicles from 2014 through August 2021, according to the Texas Commission on Environmental Quality. Texas has more than 22 million registered vehicles, according to the Texas Department of Motor Vehicles.
“The nearly 6,000 vehicles that have been purchased under the TERP [Texas Emissions Reduction Plan] program have done nothing to measurably improve air quality levels in Texas cities,” said Brent Bennett, policy director for Life:Powered at the Texas Public Policy Foundation. “Our emissions are so low that our air is almost at a natural state, with weather being by far the largest driver of air pollution levels. In fact, during the COVID-19 shutdowns in 2020, air quality levels in Texas cities were almost unchanged even as vehicle miles traveled dropped nearly 50%. Improvements in emissions control technologies and fuel efficiency are doing far more to drive improvements in air pollution than subsidizing electric vehicles.”
Bennett said lawmakers should scrap the rebate program.
“Our lawmakers need to realize that the vehicle rebate program in TERP is not serving any useful purpose,” he said. “Many of the rebates go to luxury vehicles where the rebate is clearly not a driving factor in the purchase. Texas would be better off disbanding the program and eliminating the vehicle registration fees that fund it.”
The state’s Light-Duty Purchase or Lease Incentive Program grants rebates of up to $5,000 for people who buy or lease new vehicles powered by compressed natural gas or liquified petroleum gas and up to $2,500 for people who buy or lease new electric vehicles. Under the rules of the program, only people who buy or lease new vehicles from a dealership are eligible for the rebates. The program doesn’t have a cap on the price of vehicles that qualify for rebates and the most-popular selling electric vehicle models in the United States, which are made by Tesla, don’t qualify for the rebate program because Tesla doesn’t have dealerships. The program also doesn’t have any income limits for buyers.
Most rebates awarded through the incentive program went to buyers of a handful of lower-cost electric vehicles, according to a report from the Texas Commission on Environmental Quality, which runs the program.
The Nissan Leaf, one of the least expensive electric vehicles offered for sale in the United States, accounted for 1,416 rebates totaling $3,064,645. The next most popular was the Chevrolet Bolt EV, which accounted for 758 rebates totaling $1,895,000. That was followed by the Chevrolet Volt, which accounted for 663 rebates totaling $1,640,000, according to records from 2014 through August 2021. Those three models alone accounted for rebates of $6,599,645, or 46% of the total rebates granted from 2014 through August 2021.
Texas state Sen. Brian Birdwell, R-Granbury, was the author of Senate Bill 1731 in 2017, the most recent bill signed into law that made changes to the state’s Light-Duty Purchase or Lease Incentive Program. HW Dickey, Sen. Birdwell’s chief of staff, didn’t respond to emailed questions about the program or how it has been used.
State Rep. Morgan Meyer, R-University Park, who sponsored Senate Bill 1731, did not return multiple phone calls to his district office seeking comment on the incentive program.
The Lone Star Chapter of Sierra Club in Texas, which supported Senate Bill 1731, also didn’t respond to a request for comment on the state program.
Senate Bill 5 created the Light-Duty Motor Vehicle Purchase or Lease Incentive Program in 2001, but the statewide incentive program didn’t get funding until 2014 after a legislative overhaul. It then expired and lawmakers later re-established it in 2017, according to the Texas Commission on Environmental Quality.
“Over the last decade, the Light-Duty Purchase or Lease Incentive Program (LDPLIP) has played a role in dramatic improvements in Texas’s air quality,” the agency said in a statement that cited a report. “Emissions from mobile sources – including light-duty vehicles – are the greatest contributor to ozone pollution in most urban areas. However, Texas (like most states) lacks the authority to regulate emissions from mobile sources. To address mobile emissions in light of this federal preemption, the Texas Legislature created the Texas Emissions Reduction Plan or TERP, a voluntary program that provides grant funding to help provide cleaner alternatives.”
The report did not expand on what specific role the Light-Duty Purchase or Lease Incentive Program had on improving air quality. The report did list the number of vehicle rebates issued through the program.
“It is impractical, if not impossible, to quantify the emission reductions attributable to LDPLIP incentive grants, individually or in the aggregate,” the agency said. “The program encourages greater use of vehicles powered by electricity or an alternative fuel in Texas. While the increased use of electricity or alternative fuels for transportation may have positive impacts on air quality in the state, the program does not quantify emissions reductions for each grant awarded.”
Most U.S. states have similar rebate programs.
At least 47 states and the District of Columbia had programs as of July 2021 to support electric vehicles through supporting infrastructure, legislation, or financial incentives for buying electric vehicles or electric vehicle supply equipment, according to the National Conference of State Legislatures.
Oregon has a similar program to the one in Texas, but with some differences.
The Oregon Department of Environmental Quality’s Oregon Clean Vehicle and Charge Ahead Rebate programs offer up to $2,500 for the purchase or lease of a qualifying new electric vehicle. Low- and moderate-income residents can get up to $7,500 on qualifying new or used electric vehicles.
In New York, the Charge NY program offers electric car buyers a rebate of up to $2,000 for new car purchases or leases, according to the New York State Energy Research and Development Authority.
On top of state incentives, electric vehicle buyers also can get federal rebates. All-electric and plug-in hybrid cars bought new in or after 2010 “may be eligible for a federal income tax credit of up to $7,500. The credit amount will vary based on the capacity of the battery used to power the vehicle,” according to the U.S. Department of Energy and the U.S. Environmental Protection Agency. Under the federal program, the Porsche 2015 918 Spyder could qualify for a credit of up to $3,667, according to the federal website.
In 2021, Democrats in Congress and President Joe Biden proposed boosting electric vehicle tax credits to up to $12,500, including a $4,500 incentive for union-made, U.S. assembled vehicles, Reuters reported.
Republicans have pushed back on those plans.“Given that only the richest 1% of Americans are driving electric vehicles, the Committee should be focused on more pressing issues,” U.S. Rep. Fred Upton told the Energy Subcommittee in March.