The New Jersey Board of Public Utilities (BPU) is looking to enhance an incentive program — which has helped put 7,000 electric vehicles on state roads — by making state and local government agencies eligible for EV rebates and adding a $250 incentive for home chargers.

The BPU’s proposal for the second phase of the Charge Up New Jersey program, which offers incentives of up to $5,000 for the purchase or lease of a new electric vehicle, would also reshape the package to incorporate a point-of-sale incentive, rather than making users apply for a rebate after the sale or lease.

The proposed revisions also seek to more effectively encourage the adoption of plug-in hybrid electric vehicles (PHEVs), implementing a fixed incentive system to replace an existing incentive based on the vehicle’s electric battery range, which resulted in an average payment for PHEVs of just $625, the BPU said. The agency is also proposing a “soft cap” on EVs priced above $45,000, to encourage the purchase of cheaper models. The more expensive models would be eligible for only a $2,000 incentive.

The proposed changes, which will be discussed at a public hearing Thursday, reflect the state’s continued support for the Charge Up program, which is designed to move the sticker price of EVs closer to that of vehicles powered by internal combustion engines.

Running from January to December 2020, the first phase of the program awarded incentives totaling $36 million, resulting in 7,000 new EV purchases or leases, according to the BPU. Further incentives valued at around $6 million will likely be awarded for EV buyers who sought incentives after the payment window closed, the BPU said.

Boosting EV Sales

New Jersey Gov. Phil Murphy has set a goal of putting 330,000 electric vehicles on state roads by 2025, as part of his master plan for the state to run 100% on clean energy by 2050. EVs would account for at least 85% of light-duty vehicles sold or leased in New Jersey by 2040. The EV incentive proposal comes as the BPU is also evaluating the best strategies for increasing the number of EV charging stations across the state. (See: BPU Rules Would Codify Charging Station Development.)

The New Jersey Department of Environmental Protection estimates that about 40% of the carbon emissions in the state come from transportation and believes that reducing vehicle emissions will be vital to reaching the goal, set by Murphy and the legislature, to cut carbon dioxide emissions to 80% below 2006 levels by 2050.

Yet the state will have to work hard to reach its vehicle goals. While BPU figures show a 37% increase in the number of EVs registered in New Jersey from December 2019 to December 2020 ― a jump from 29,960 vehicles to 41,096 vehicles ― the electric fleet accounts for only 12.5% of the 330,000 goal.

Ashkan Shokoohy, a sales manager at Hudson Nissan in Jersey City, said he was not aware of the details of the Charge Up New Jersey program, but he said that an incentive of $5,000 could help persuade customers to make a purchase.

“It’s a good amount,” said Shokoohy, who sells the Nissan Leaf, which has a manufacturer’s recommended price of between $31,670 and $43,970, according to the Nissan website. “It may move the needle a little bit, but it doesn’t turn into that huge flow of customers that, due to this program, now they are changing their lifestyle or car hobbies or switching from gas to electric.”

Stefanie A. Brand, director of the New Jersey Division of Rate Counsel, the state’s consumer advocate, said that the BPU appears to be building on the success of the first phase. But because the price of electric vehicles is still high, the program is mostly focused on granting incentives to richer residents, she said.

“I don’t think these incentives really bring them into the average car buyer’s price range,” she said. “But I’m sure every little bit helps.

“It still has value to try to encourage people to switch over to electric, and I’m hopeful that car companies are working on getting these electric cars into an affordable range,” Brand said. “I think we’re not really there right now, and this program is designed to try to help get us there.”

High End Buyers

In the program’s first phase, 93% of recipients received the maximum $5,000 incentive, according to the BPU. Tesla vehicles accounted for 83% of the EVs purchased, with 17% going for all other makes and models, the agency said.

One reason for the shortfall in non-Tesla vehicles was the limited number of models on offer in the state, the BPU’s proposal said.

“Many car buyers indicated that their vehicle of choice was not present or offered in New Jersey,” the proposal said, adding that the lack of availability could serve as a barrier to the adoption of a wider variety of EVs. “New Jersey will need ample available EV product in order to successfully expand its market and meet customers’ desires for more EV options,” the proposal said

Only 4% of the incentives in the first phase of the program went to plug-in hybrid vehicles, according to the BPU. That can be important, the agency added, because PHEVs “are often the entry point into EV ownership and may help ease the transition from gas to electric for those most concerned about the range of an EV.”  Plug-in hybrids are also an attractive option for residents of multi-unit dwellings where charging points are not available and residents can’t install their own, the proposal says.

Eligibility Rule Changes

Both the first proposal and the revised version offer consumers who buy or lease an EV an incentive equal to $25 per mile of electric battery range, up to a maximum of $5,000. The new proposal suggests these changes:

• For vehicles with a manufacturer’s recommended price of $45,000 to $55,000, incentives would be reduced to $2,000. Vehicles costing more than $55,000 are not eligible for rebates.
• The sale or lease of a PHEV would be eligible for a fixed incentive, the size of which has still to be determined.
• State and local governments would be eligible for program incentives for the first time.
• The approval process for incentives would be streamlined to provide rebates at the point of sale. Instead of an EV buyer applying for the incentive at a program website after purchasing a car, and waiting to be reimbursed by check, the customer would receive the incentive while buying the vehicle. The dealer would process the paperwork as the consumer buys the car, with the sale price reduced by the amount of the incentive. The dealer would be reimbursed for the cost of the incentive by the BPU.

A third phase of the program, to run concurrently with the second, would add an incentive for EV owners to install a “smart charger” that can collect and transmit operating data to be used to analyze consumer behavior. The incentive would pay half the cost of the charger, to a maximum of $250.

Doug O’Malley, state director of Environment New Jersey, said the shift away from after-purchase rebates to a point-of-sale model makes the program much more user friendly.

“That’s to both boost sales,” he said, and make the potential incentive much clearer to a buyer. “Psychologically, when they are making that decision on the lot, you can immediately see the savings off the sticker price with the EV rebate incorporated into it.”

That will enhance a program that has already shown it can “spur sales,” and so too will the incentive for home chargers and the “expansion of the program to state and local police,” he said.

“This is exactly the direction that we want to see the BPU moving toward,” he said.