Overcoming the inequity of incentives for electric vehicle ownership
By Z. Andrew Farkas
Dec 05, 2018 at 11:20 AM
Electric vehicles and hybrids are among the 400 makes and models on display at this year's San Diego International Auto Show.
The recent National Climate Assessment has made clear that human-induced climate change has devastating effects. Central Maryland for many years has been an “ozone nonattainment area” — meaning it doesn’t meet air quality standards — because of ground-level ozone experienced during our hot summers. Concerns over climate-changing greenhouse gas emissions and poor air quality have induced the state to set a goal of 300,000 electric vehicles (EVs) in Maryland by 2025.
Despite significant growth in EV ownership — the total number of registered EVs grew from 609 in fiscal year 2012 to 15,074 in FY 2018, according to the Motor Vehicle Administration (MVA) — there is a long way to go to reach the 2025 goal, so federal and state governments have provided financial incentives for purchasing new EVs. (There are no incentives for buying a pre-owned EV.)
Buyers of new EVs are eligible for a federal tax credit of $7,500 and state excise tax credit of up to $3,000, depending on battery capacity, funding availability and the purchase price of the vehicle, which must be below $60,000. Further, Maryland EV owners, depending on the technology, pay little or no motor fuel tax to the state’s transportation trust fund.
My colleagues — Hyeon-Shic Shin and Amirreza Nickkar — and I at Morgan State University analyzed data from a survey we conducted with the help of the MVA to determine who EV buyers are and how EVs are used. MVA identified 4,282 EV (non-fleet) owners by county in summer 2016. They notified the owners by letter of survey objectives and a web link to our on line survey. We received 1,323 responses.
We found that EV owners are white (85 percent), male (75 percent), well educated, affluent (80 percent of them have a household income greater than $100,000), older, urban/suburban oriented and environmentally conscious. They charge their EVs at home and use them to commute to work (similar to findings in other areas of the country). “Environmental concerns” is the most important factor for purchasing and driving an EV; “price and status” is the second most important factor; “efficiency and performance” of the EV is the third most important. EV owners with lower household income (less than $100,000) — the remaining 20 percent — are younger, exurban/rural oriented, and concerned about price and status of the EV. Government at state and federal levels has been subsidizing mostly affluent households to purchase new EVs, which opens up a huge equity issue. Not to mention, other research shows that buyers of high-end luxury EVs are not influenced by financial incentives.
As an additional incentive to increase EV market share, the state, under the last administration, committed to placing charging facilities at Maryland Transit Administration (MTA) commuter rail and light rail stations with parking spaces in Baltimore and Central Maryland. Remarkably, no charging facilities were planned for Washington Metropolitan Area Transit Authority (WMATA) Metro rail stations in Montgomery and Prince George’s counties, despite those counties having high concentrations of EV owners. WMATA’s contracts for parking didn’t allow for charging facilities within the state’s time frame, so funding was instead allocated to additional MTA sites around Baltimore without consideration of commuter demand.
In pursuit of Maryland’s ambitious goal of 300,000 electric vehicles on the street by 2025, utility companies and other stakeholders are proposing to install a $104 million network of 24,000 charging stations across the state — which would be the second-largest in the country, after California’s.
The state probably assumed that EV owners would be rail transit users when commuting to work because they are environmentally conscious. However, our survey found that very few EV owners used rail transit for commuting to work prior to EV purchase (5 percent), and even fewer after purchase (2.6 percent). Yes, we confirmed that most EV owners are environmentally conscious, but they probably believe they’re already contributing to environmental preservation by owning an EV. As more employers add charging facilities at the work site, the incentive to commute with an EV grows.
To overcome the inequity of current EV incentives, the state should now concentrate public charging facilities in exurban/rural and multifamily locations, where they are scarce, and steer financial incentives toward EV taxis, shared-ride and car-sharing fleets and pre-owned EVs, which would promote EVs to lower income households. Coupled with incentives, the state should craft educational campaigns that inform households at all income levels about the climate and air quality and financial benefits of EV ownership.
Z. Andrew Farkas is director of the National Transportation Center at Morgan State University and a member of the Maryland Electric Vehicle Infrastructure Council. His email is email@example.com.