Electric vehicles (EVs) are growing in popularity, but they’ve got a long way to go before their sales numbers match or surpass those of gas-powered cars. California is the state with the highest number of EVs, and it’s the world’s second-largest EV market behind China (if Europe is split by country). Still, even in that state’s extremely green automotive market, pure electric cars accounted for just five percent of total vehicle sales during the first half of 2019. Low-income drivers aren’t typically considered in EV marketing plans, but they could very well play a significant role in broadening the adoption of these electrified green machines.
- Low-income drivers make up a significant chunk of the car-buying market.
- Many drive aged, polluting cars because they can’t afford newer, cleaner vehicles.
- Certain states have rolled out new programs designed to make EVs more affordable for low-income car buyers.
Defining the low-income buyer
It’s important to know that the definition of “low income” varies from state to state. These limits are based on percentages of median incomes by family size and location, using information gathered from census data.
Without subsidies, even a relatively affordable EV like the Chevy Bolt might be out of reach for many car shoppers. (Photo: Chevrolet)
There are three categories that fall under the low-income umbrella: low (80 percent of the median income), very low (50 percent), and extremely low (30 percent of the median income or the federal poverty line, whichever is greater). In certain cities, the limits are higher than some might expect. For example, in Los Angeles, a one-person household with an annual income of $46,050 or less qualifies for federal low-income assistance.
An untapped market
Though the income limits for qualification may seem high, they are warranted when you consider how steep the costs associated with rents and mortgages are in some parts of the country. Many of the folks who live in these areas are forced to devote a major part of their income to paying for the roof over their heads. They genuinely can’t afford to spend a lot of money on newer transportation, so they often make do with cars that are old and inefficient.
These drivers represent a big part of the car-buying market. If there was a way to bring them into the EV fold, it could have a notable impact on the adoption rates for these electrified vehicles.
Clean cars in California and beyond
California is hoping to get these drivers on the EV bandwagon via a new program called Clean Cars for All. This program aims to make clean-air vehicles accessible to low-income residents. It’s funded using state climate investments; it also derives a portion of its funding from the $10 million in penalties that Volkswagen was forced to pay after that company admitted to cheating on diesel emissions standards.
Clean Cars for All helps drivers make the switch from old clunkers to EVs like this shiny new Nissan Leaf. (Photo: Nissan)
The Bay Area’s Clean Cars for All program was launched in March of this year. Since then, it’s helped nearly 200 people make the switch from old clunkers to newer, greener transportation. Some of the cars that were retired and replaced date back to the 1980s.
This program provides up to $9,500 for the purchase of a plug-in vehicle. It also provides up to $2,000 to assist with the installation of a home charger.
Other states have rolled out programs that are designed to offer subsidies to low-income car buyers. Maine offers rebates of up to $3,000 for low-income residents seeking to purchase an EV. And Vermont offers income-based rebates of up to $2,500 for EV buyers.
WHY THIS MATTERS
California and a few other states have been cutting back on their rebates for EVs. These cutbacks are mainly targeted toward those with higher incomes; for example, in California — effective December 3 — EV buyers purchasing vehicles that cost more than $60,000 no longer qualify for the state’s $2,500 clean-vehicle rebate. Fortunately, rebates and subsidies remain in place for buyers with low to moderate incomes. This will hopefully go a long way toward helping expand the market for EVs.