Want to get a state rebate for your electric vehicle? You’ll have to buy or lease one by April 30.
The Oregon Department of Environmental Quality announced Wednesday that it’s temporarily suspending the Clean Vehicle Rebate Program for a year starting in May because too many people are applying and the program is running out of money.
The news comes as a growing number of Oregonians are buying or leasing EVs. There are over 60,600 electric vehicles registered in the state.
The rebate program has disbursed more than $71 million over five years to help people buy or lease roughly 40%, or 25,000, of those cars. A fifth of the rebates went to low- and moderate-income households, state data shows.
“Even though we’re announcing a temporary suspension, it really shows the program is a victim of our own success,” Rachel Sakata, senior air quality planner with DEQ, told The Oregonian/OregonLive. “We’re one of the top states in the nation in terms of the percentage of EV sales.”
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A bill before the Legislature may allow the rebates to restart sooner but it’s not designed to be a long-term source of funding if it passes.
And EV sales and leases are likely only to grow, encouraged by a new state mandate for emission-free vehicles.
In December, Oregon policymakers banned the sale of new gasoline-powered passenger vehicles in Oregon by 2035, though Oregonians will still be able to buy used gas vehicles after that date. Oregon’s Department of Transportation estimates that people will be driving 1.5 million electric vehicles in the state by 2035, based on current EV registrations and adoption rates. About 3.2 million passenger vehicles are registered in Oregon today.
Since the end of 2018, the state has offered two cash rebates for Oregon drivers who buy or lease electric vehicles or plug-in hybrids under $50,000. The standard rebate of up to $2,500 is available regardless of income and can be received at participating dealers, while the “charge ahead” rebate of $5,000 is aimed at low- or moderate-income households and must be accessed via a mail-in application. The two rebates can be combined for up to $7,500 cash back.
Those rebates will be suspended as of May 1, meaning the owner of any eligible EV bought or leased before that date is still eligible to apply – but must submit the application within six months of getting the EV. But owners may not see their rebate money until spring 2024 when the rebate program receives its annual funding.
The rebate program receives 45% of the vehicle privilege tax – a tax on all new car sales in Oregon – or $12 million annually, whichever is higher. In 2022, the Legislature also approved a one-time $15 million allotment for the rebates, for a total of $27 million.
The DEQ disbursed much of that money in rebates last year, carrying over $3.5 million into 2023, Sakata said.
The agency is projecting the program will receive another $14 million this year via the vehicle privilege tax. But this year’s funding will be depleted in the next few months based on the volume of EV sales, she said.
Forth, an Oregon nonprofit focused on electric vehicle accessibility, is working with legislators to secure $30 million of supplemental funding for the rebate program for the 2023-2025 biennium.
While EVs are a great tool to reduce emissions, they are still more expensive than gas cars, said Jeff Allen, Forth’s executive director.
“Forty percent of our climate pollution comes from transportation, so we absolutely have to electrify every vehicle on the road to meet our climate goals,” Allen said. “Every time somebody buys a gas car, that is a 20-year investment in pollution. … Those cars are going to be on the roads for a long time. So it’s really important to help regular working folks to be able to afford to go electric.”
If the bill is successful, the rebates could again be available this summer. But it’s a stop-gap measure that doesn’t solve the future of the rebate program, which is likely to run out of funding again as more people apply, said program coordinator Erica Timm.
The program was to sunset after five years, but legislators dropped that deadline, allowing it to continue past 2024.
“Based on current projections, if funding remains the same and adoption of electric vehicles and participation in the rebate program remains as is, we would likely be looking at another temporary suspension in 2024,” said Timm.
No matter what happens with the state rebates, Oregon drivers still qualify for a federal tax credit of up to $7,500 for new EVs under the Inflation Reduction Act. Those who buy a used EV can qualify for a $4,000 credit. Utilities across Oregon are also offering rebates that support the use of electric vehicles and chargers.
Allen, Forth’s executive director, said the state rebates should continue until the price of electric vehicles starts to come down. Suspending the program now — just as EV sales in Oregon are ramping up — sends the wrong message, he said.
“It’s a real chilling effect on the market,” Allen said. “Most people who want to buy a car are not going to wait six or 12 months.”