What’s Happening

Following California’s lead

New Jersey adopted the California car program in 2004, which mandates automobile dealers sell an increasing percentage of electric vehicles each year. Currently, approximately 140,000 EVs are on New Jersey roads. But the law says that by 2025, 330,000 vehicles need to be sold.

The so-called Charge Up program is hugely popular, often closing down a few months after accepting applications for rebates because the typical $30 million fund is quickly depleted. The program went into effect in in 2020; the New Jersey Board of Public Utilities has handed out 36,406 of these incentives for a total of $119,878,575, as of mid-February 2024. The average incentive for battery-powered electric vehicles is $3,351; for plug-in hybrids, it’s $856.

Jim Appleton, president of the Coalition of Automotive Dealers, called the $20 million infusion for the Charge Up program welcome, but opposed doing away with the sales tax exemption. “It will essentially render the governor’s goal of electrifying transportation unachievable,’’ he cautioned. “We are not going to get there without ‘cash on the hood’ and a sales tax exemption.”

The transportation sector is the largest source of greenhouse gas emissions, so reducing global warming pollution from vehicles is one of the main components of combating climate change. The state also plans to crack down on emissions from heavy-duty trucks, buses and other vehicles.

Sales-tax exemption, ‘powerful tool’

Unlike the on-again and off-again Charge Up program, the sales tax exemption of 6.5% per vehicle is a powerful tool for car dealers, according to Appleton.

“When the Charge Up program runs dry, they lose the only incentive they have to work with in the showroom,’’ he said. “If that goes away, that 6.5% on a $40,000 car, that’s a lot of money.’’

EVs are more expensive than conventional gasoline-powered vehicles, but advocates contend they are less expensive to operate and maintain. Many consumers, however, shy away from buying electric vehicles because they are worried about too few public charging stations.

“Obviously, having more money for rebates is great. It makes it easier to make the numbers work for consumers,’’ said Doug O’Malley, director of Environment New Jersey. “But it’s premature to sunset the sales tax exemption; it is going to hurt sales.’’

Despite the rebate program’s popularity, many would-be EV buyers can’t obtain any incentives because the $30 million annually mandated for them is quickly exhausted, advocates said.

The BPU did not respond to repeated messages seeking an explanation of the parameters of both proposals. Details were not spelled out in the budget documents released last week or in Murphy’s speech this past Tuesday.

Pam Frank, CEO of ChargEVC, a broad coalition of groups seeking to electrify the transportation sector, noted the EV mandated at least $30 million be spent on the Charge Up program each year, but added there is no cap on how much should be allocated. “We need to expand funding to the level it needs to be,’’ she said.

O’Malley agreed. “We really need to put the foot on the electric vehicle accelerator for the next few years,’’ he said.

— Graphic by Genesis Obando