How California’s EV rebate works: Who’s eligible, and is it worth it?

What the incentive program does

California’s ongoing efforts to create a cleaner environment have impacted the automotive industry. In seeking to reduce vehicle emissions, the state began offering the Clean Vehicle Rebate Project (CVRP) in 2010 as an incentive program to improve public health and cut air pollution.

See: Here are two stocks that stand to benefit from California’s electric-vehicle push

The incentive program offers rebates for the lease or purchase of new zero-emission vehicles that meet eligibility requirements. Since its inception, the program has provided nearly 402,000 rebates on plug-in, electric, and hydrogen fuel-cell vehicles that have totaled more than $918 million, according to CVRP’s latest figures.

Eligibility for EV rebates

So who can take advantage of these rebates? Buyers must meet several requirements.

• California-based. Each buyer, business, nonprofit, or government entity must be based in California or operate a California affiliate at the time of the vehicle’s lease or purchase.

• Income eligibility requirements. There are also income eligibility requirements that exclude higher-income consumers if their income is above a state rule cap. It ranges from $150,000 for single filers, $204,000 for household heads, and $300,000 for joint filers. The cap affects all eligible vehicle types except for fuel-cell electric vehicles.

• Higher rebate amounts possible. Consumers with incomes at or below 400% of the federal poverty level can receive higher rebate amounts. Higher rebate amounts are also available for plug-in hybrid vehicles, battery electric vehicles, and fuel-cell electric vehicles.

• The vehicle must be on the list. Additionally, the EV must be on the eligible vehicles list for the leased or purchased car to qualify. As of April 6, several vehicles got removed from the list, including the Hyundai Sonata Plug-in Hybrid (PHEV), the Kia Niro PHEV, and the Toyota Prius Prime.

• New vehicles only. All vehicles must be registered as new in California, with an odometer reading below 7,500 miles at the time of lease or purchase.

Related: What is EV, BEV, HEV, PHEV? Here’s your guide to types of electric cars

As you might imagine, the program offers a finite amount of funding. Car buyers can apply for the rebate, but the state may put you on a waiting list for the funding.

Consumers can apply for the program online. If accepted, they must own the vehicle in California for at least 30 consecutive months after the lease or purchase date.

If you’re interested in the program, it’s a good idea to check out detailed information on program eligibility.

Beyond the program itself, you can also find other incentives for EV chargers and reduced electricity rates.

Is it worth it?

Electric and plug-in vehicles often come with a higher price tag. The state designed the incentives to help buyers offset some of that premium. So when you factor in the rebate, along with other savings, it makes sense to consider buying a zero-emission vehicle.

Other savings will come from not visiting the gas pump. Also, drivers can obtain federal tax credits of between $2,500 to $7,500. The federal government also provides up to $8,000 for electric cars powered by fuel cells. Many utilities and local areas also offer incentives.

If you purchase or lease a plug-in hybrid and live in California, you could also be eligible to receive a $1,000 standard rebate. Battery electric vehicles get a standard $2,000 incentive, and hydrogen fuel-cell vehicles get a standard $4,500 break. Lower-income participants could receive as much as $7,000 for fuel-cell EVs, $4,500 for battery-powered electric cars, and $3,500 for plug-in hybrids.

See: Everything you need to know about the high-tech 2021 Toyota Mirai

Rebates get delivered as cash when sold or as a check sent out up to a year and a half after purchase or lease.

Another benefit isn’t so much financial, but one of convenience. You may qualify to obtain a Clean Air Vehicle Decal from the California Division of Motor Vehicles. This decal allows you to drive solo in the HOV (carpool) lane, alleviating some of the state’s notorious traffic headaches.

Current and future vehicle marketplace

There’s no doubt that zero-emission vehicles are gaining popularity world-wide as nations try to wean themselves off fossil fuels. But as of 2020, sales of battery, plug-in hybrid, and fuel-cell electric vehicles still tallied just 2.2% of new car sales, according to research firm IHS Markit. So the shift will take some time.

But by 2050, experts from IHS Markit predict that 60% to 80% of new car sales will be electric. Innovation in battery technology and increased manufacturing scale are critical factors in the projected growth.

General Motors
GM,
+1.27%
recently announced that it would sell only zero-emission vehicles by 2035.

IHS also said that while the majority of new sales in 2050 will be electric vehicles, about two-thirds of the estimated 1.9 billion vehicles on the road at that time will still be gasoline-powered.

See: The 2022 Chevy Bolt EUV is shaping up to be a good choice among compact electric SUVs

So if you want to be on the cutting edge of green technology, and you’re intrigued by the savings you could rack up on your next car purchase, consider a zero-emission vehicle. It could be a good move for the environment and your wallet.

This story originally ran on Autotrader.com.