The California Air Resources Board (CARB) will hold a hearing this week to consider increasing the state’s plug-in vehicle purchase incentive from the current $2,500 to $4,500, in order to compensate for the phase-out of federal subsidies on Tesla and GM vehicles.

The $7,500 federal EV tax credit is designed to sunset for each individual automaker once the company has sold a total of 200,000 eligible vehicles. Tesla passed this threshold in July and GM is getting close.

CARB Chair Mary Nichols said she still hopes that Congress will lift the cap so more plug-in vehicle buyers can qualify for the federal credit (as GM CEO Mary Barra has suggested). If not, Nichols said, “we would…look at another way to make up for that.’’

Revenue to pay for an increase is becoming available as companies buy more credits to comply with the state’s Low Carbon Fuel Standard, said CARB member Dan Sperling. At this week’s hearing, the board will consider requiring oil companies to cut carbon intensity by 20 percent by 2030 compared with 2010 levels, an increase over the 5 percent reduction that was mandated this year.

The state’s current $2,500 is financed from a different source: the purchase of credits to comply with the state’s carbon-dioxide cap-and-trade program.

Automakers and utilities have proposed that, if the subsidy is increased, it should be paid directly to consumers at the point of sale, as opposed to the current mail-in rebate system.

CARB will also consider boosting subsidies for charging infrastructure, Sperling said, and may also mandate that urban transit systems buy only battery- or hydrogen-powered buses by 2030. The state’s electric utilities have emerged as enthusiastic backers of such measures, Sperling said, as they see ratepayer-funded charging stations as a new source of revenue.

The board also plans to vote on whether to force carmakers to continue complying with Sacramento’s greenhouse gas limits, even if Washington proceeds with its plan to weaken existing standards.

Source: Bloomberg