Oregonians looking to purchase an electric vehicle this year should do so soon, before the state suspends its popular EV rebate program due to lack of funds.
The Oregon Department of Environmental Quality will temporarily suspend the Oregon Clean Vehicle Rebate program starting May 1 until funds for the program are replenished next year. This is the first time DEQ has paused its rebate program, which began in late 2018. The program offers two levels of rebates based on a person’s income, and it was designed to encourage the purchase or lease of zero-emissions vehicles as a way to reduce greenhouse gas emissions statewide.
The program receives 45% or at least $12 million a year from the state’s vehicle privilege tax — a tax paid by car dealerships. DEQ projects it will receive about $14 million in 2023. In total, the program’s 2023 budget is $17.5 million, with $15.5 million available for rebates.
DEQ’s senior air quality advisor Rachel Sakata said since the program began, the agency has issued more than $71 million in rebates to nearly 25,000 applications. But, simply put, the program is getting too popular as more people turn to EVs.
“Unfortunately, we’ve become a victim of our own success and we’re running out of money,” Sakata said. “That means that any electric vehicles that are purchased or leased prior to April 30 can still receive a rebate in 2023, but any purchases or leases after May 1 will not be eligible.”
Residents who do purchase an EV on or before April 30, still have six months to apply for the rebate. However, if funding runs out, residents will be put on a waiting list and receive rebates once the program is replenished. DEQ estimates the suspension will be lifted in March 2024, or earlier if the program receives additional funding for 2023.
Oregon’s transportation sector accounts for nearly 40% of the state’s total greenhouse gas emissions, the largest single source in the state. DEQ’s temporary suspension comes as the state has been moving away from gas-powered vehicles. Earlier this year, Oregon aligned with California and Washington by adopting rules that will ban the sale of new gas-powered vehicles by 2035. The state is ranked second in the nation, behind California, for the share of new vehicles sold that are electric. Oregon is also investing millions toward increasing the number of electric vehicle chargers along major roadways and in rural areas.
“What we’re really seeing is that EV adoption is increasing,” Sakata said of the DEQ program running out of funds. “It’s great to see such an explosive growth in the program.”
Despite the program being on hold, Sakata said Oregon residents who want to purchase an electric vehicle after May 1 can still get help through the federal government. Qualifying households can apply for up to $7,500 in federal tax credits, depending on the vehicle purchased.
Forth, a nonprofit dedicated to increasing equitable access to electric transportation, criticized the pause. Executive director Jeff Allen said the suspension could have not come at a worse time, as data show more Oregonians are making the switch to electric vehicles. He said the suspension likely will affect low to moderate-income households who would benefit the most by purchasing an EV.
“It’s absolutely terrible that this rebate program is being suspended,” Allen said, adding he expects “an enormous chilling effect” on EV adoption as a result.
Forth has been a leader in helping residents switch from gas-powered vehicles to electric by providing outreach and education on how the vehicles work and what incentives exist. He said his group was part of a coalition that designed the rebate program in 2017. Since then, he said, the program has been a model for other states.
“I think really the problem is just that people underestimated how popular this program was going to be, which is a great problem to have,” he said.
According to Oregon DEQ’s clean vehicle rebate coordinator, Erica Timm, the projected costs to cover the program will only become more expensive as Oregon gets closer to 2035.
“The number for next year for example, is an estimated $33 million to cover the costs,” she said when asked about projections. “But if we were to look out to, say, 2030, we were looking at the projected cost could be over $91 million a year.”
For 2023, the state would need around $30 million this year to fulfill all the projected demand for rebates.
That’s the exact amount legislators are asking for in House Bill 2613, which would declare an emergency and allocate money from the state’s general fund to DEQ on July 1.
Rep. Susan McClain, D-Hillsboro, is a chief sponsor of the bill. She said suspending the rebate when EV prices are rising will only increase barriers for Oregonians. She also called the pause “a huge step backward” for Oregon’s climate goals.
“We need the governor and Legislature to act quickly to fund this program and either prevent this suspension or end the suspension as quickly as possible,” he said.
If the proposed bill goes through, Allen said, it provides an opportunity for Oregon to think more thoroughly about what the rebate program needs to be successful and avoid future suspensions.