California to limit electric car rebate program to earners below $250k

FILE: Angie Vorhies plugs in the charging cord to her Nissan Leaf electric vehicle at a San Diego mall in November 2013.
FILE: Angie Vorhies plugs in the charging cord to her Nissan Leaf electric vehicle at a San Diego mall in November 2013.
Lenny Ignelzi/AP

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New rules go into effect Tuesday for California's electric and plug-in hybrid vehicle rebates, eliminating the cash given back to high earners and upping the amount for those who make less.

Those who make $250,000 or more or have a combined household income topping $500,000 will no longer qualify for discounts on the cars, while those with lower incomes will qualify for a larger rebate.

"The state of California is trying to increase the accessibility of these vehicles to all Californians," said Collin Santulli, a program manager with the Center for Sustainable Energy, which runs the rebate program for the state.

The program, which offers $2,500 for all-electric vehicles and $1,500 for plug-in hybrids, has been in effect since 2010 in an effort to incentivize more Californians to buy the cars, which produce no or low carbon emissions.

But data collected by the Center for Sustainable Energy show that less than a quarter of current rebates go to households earning less than six figures and many state legislators have criticized the program as a subsidy for the rich.

Under the new rules, individuals and households that earn 300 percent of the Federal Poverty Rate  or less will qualify for a rebate of $4,000 on electric cars and $3,000 on plug-in hybrids.

The rebate for earners above that threshold but below the $250,000/$500,000 combined level will still qualify for the standard rebates of $2,500 and $1,500.

Jessica Caldwell, an auto industry analyst for Edmunds, predicts the loss of a rebate will have little effect on the high-end market for electric vehicles, like Teslas.

"I don't think for vehicles like the Model S or the new Model X, because its such a status car right now, I don't think that's necessarily going to dissuade people from buying it," she said.

The shift in rebates could be a boon, she says, for more mass market cars like the Nissan Leaf or Chevy Volt, which cater to more price sensitive populations looking to save money on gas or obtain HOV lane stickers.

Even luxury brand Tesla could benefit. This Thursday the company will unveil its new Model 3 sedan, which it intends to sell for $35,000.

Top earners will continue to qualify for a $5,000 rebate on fuel cell cars, which run on hydrogen gas.