NJ EV Incentives Target Low-income Buyers
But New Registration Fees Could Undermine EV Sales, Advocates Say
The shift in incentive strategy, toward low- and mid-income buyers, comes as New Jersey seeks to continue its recent relatively strong EV sales amid signs of weakening markets in other states.

New Jersey soon will reopen its $30 million Charge Up electric vehicle (EV) incentive program for a fifth year with new rules that offer the top incentive — $4,000 — only to low- and moderate-income buyers. The just-passed state budget also tops up the program with an extra $20 million. 

The New Jersey Board of Public Utilities (BPU) on June 27 approved the $30 million as part of a package of $82.5 million in EV-related expenditures in the agency’s clean energy budget, among them incentives to support charger installation at tourist sites and in multiunit dwellings, as well as local government EV purchases and charger installations. 

The BPU has not released a date for the start of the Charge Up program, which will include the $20 million in additional funds put in the state budget by Gov. Phil Murphy (D), for a total of $50 million. But the launch is expected in two phases: The first one — offering a $2,000 incentive to all vehicle buyers — will start early this month, and the additional $2,000 for low- and moderate-income buyers will be available in the fall. 

The shift in incentive strategy comes as New Jersey seeks to continue its recent relatively strong EV sales amid signs they are weakening in other states. The state also is considering how the program can have the deepest impact in a market in which buyers now can access much larger $7,500 federal incentives under the Inflation Reduction Act. (See Will Final Rules on EV Tax Credits Help or Hurt US Market Growth?) 

EV sales also face new headwinds in New Jersey after Murphy on June 28 ended an exemption from sales tax for EV buyers, and the legislature added a fee that can add $1,000 to a purchase. 

Launched in 2020, the Charge Up program in recent years has offered incentives of up to $4,000 for buyers of vehicles priced less than $45,000, with up to $1,500 awarded for vehicles priced between $45,000 and $55,000. BPU officials developed the strategy after most of the incentives in the early years of the program went to buyers of Tesla models, the higher-priced vehicles on the market. 

In setting the $45,000 threshold for the maximum incentive, BPU officials said they wanted to target “incentive-essential” buyers, those with lesser economic means who opt for a cheaper vehicle and might not buy an EV without the subsidy. (See NJ Ramps up EV Purchase, Charger Installation Programs.) 

That level of incentive now will be open only to lower-income buyers. 

“We’ve restructured the program for vehicle incentives to help better ensure that incentives are going to support people who otherwise wouldn’t be able to switch to electric,” BPU President Christine Guhl-Sadovy said before the board approved the 2025 clean energy budget. 

Explaining the new program structure at a May 31 public hearing, Cathleen Lewis, e-mobility program manager for the BPU, said “incentives for EVs with an MSRP of $55,000 or less will have a fixed incentive of $2,000.” Income-qualified applicants then will be eligible for an additional incentive in the amount of $2,000.  

To be eligible, single tax filers who buy an EV must have incomes below $75,000, and joint tax filers must earn no more than $150,000, she said. The median household income for EV owners in New Jersey was $89,703 in December 2023, according to Atlas Public Policy. 

To date, Charge Up has awarded $120 million, supporting the purchase of more than 36,000 vehicles. Funding in the Charge Up program historically has been exhausted within months of its opening. In a June 14 letter to the board, the New Jersey Division of Rate Counsel argued that demand is so strong that a maximum incentive of $2,500 would stimulate sales and allow the funds to last longer.  

EV Sales Escalation

The shift comes after EV sales in New Jersey increased dramatically in 2023, even as some analysts say EV sales are slowing across the country. 

New Jersey added 62,426 new EVs on the road in 2023 – up 68% over the 2022 figure, based on figures from the Department of Environmental Protection, according to ChargEVC-NJ. ChargEVC called the increase the “largest year-over-year growth ever recorded based on DEP figures in the state,” and the organization, which promotes EV adoption, and other EV supporters say the figures show New Jersey is in reach of its goal of having 330,000 EVs on the road by the end of 2025.

Yet supporters say that trajectory may be undercut by several measures adopted by the state this year, which could slow the uptake of EVs.  

Murphy’s signing of the bill, A4702, that ended the exemption from state sales tax for EV buyers followed the enactment of a law, A4011, that added a $250-to-$290 fee to the price of an EV that was designed to help pay for road repairs the way the registration on gas-fueled vehicles does. Because the fee will be paid at purchase for four years at once, critics say it will add more than $1,000 to the price of an EV from July 1, the start of fiscal 2025. (See New Jersey Lawmakers Back $250 Annual EV Fee.) 

The two measures followed the state’s adoption of California’s Advanced Clean Cars II rule, which will require all new light-duty vehicles sold in the state to be zero emission by 2035. The rule requires manufacturers to make zero-emission vehicles (ZEVs) a steadily increasing portion of their car sales, starting with 35% for model year 2026, increasing to 68% in 2030 and reaching 100% in 2035. (See New Jersey to Adopt Advanced Clean Cars II Rule.) 

Aside from funding for the Charge Up program, the state budget adopted by the legislature on June 30 included $10 million to help local governments buy EVs and chargers, $9 million to help install chargers in multiunit dwellings and $15 million to help school districts buy electric buses. An additional $2 million will go to a pilot program to use EV school buses for vehicle-to-grid energy storage and $6 million for a pilot depot to provide chargers for medium- and heavy-duty vehicles. 

Consumer Charging Concerns

ChargEVC calls the EV fee and the phaseout of the sales tax exemption “unforced errors” that could slow the state’s upward trajectory of EV sales. The organization says the number of light-duty electric vehicles increased by 66% in 2023, to 151,827, and the number of plug-in hybrids grew by 91%. Still, EVs in 2023 made up only 2.2% of all vehicles in New Jersey, ChargEVC said in April. 

The state added roughly an additional 18,000 vehicles in the first three months of 2024, up 11%, according to figures compiled by the DEP. EVs accounted for about 2.6% of all vehicles in the state, the DEP figures show. 

“We certainly hope the $4,000 incentive for low-income buyers will help” boost sales, said James Appleton, president of the New Jersey Coalition of Automotive Retailers (NJCAR). “The sad truth is that the State of New Jersey is giving with one hand and taking away with the other.” 

He said he does not believe New Jersey’s EV demand is as robust as ChargEVC thinks, and added that the Advanced Clean Cars II rule requires car companies to sell 110,000 EVs in 2024, well above what the state achieved in 2023. 

“Consumers are kicking the tires on EVs, but dealers tell me that price and the absence of clear and consistent state and federal incentive programs make it hard to get and keep consumers interested in actually pulling the trigger to buy,” he said. One reason EVs are selling in New Jersey is that “car buyers in [New Jersey] are generally more affluent and the higher price for most EVs isn’t as serious a barrier in [New Jersey] as elsewhere.” 

But the state’s shortfall in charging stations is affecting sales, he said in an email. PHEVs are selling well because “consumers are going into dealerships looking for an EV and driving away with a PHEV because of price and because of concerns about publicly available, reliable charging infrastructure.” 

New Jersey ranked fifth in the nation by number of electric vehicles, not including PHEVs, according to figures for 2023, the latest figures compiled by the U.S. Department of Energy’s Alternative Fuels Data Center (AFDC). New Jersey had 125,317 all-electric vehicles, compared to 1.178 million for top-ranked California, 231,518 for second-place Florida and 210,433 for third-place Texas.  

But New Jersey lags in charging ports. The state is 14th in the nation, with 3,834 ports, compared to California with 46,501 ports, according to AFDC figures. New York is third, with 10,048 ports. New Jersey has one port for every 32 vehicles, compared to one for every 25 vehicles in California and one for every 10 vehicles in New York, the agency’s figures show. 

Doug O’Malley, director of Environment New Jersey, said the state policy is “schizophrenic.” 

“EV sales have been increasing tremendously over the course [of] the last two years. We’re really starting to see … the EV market take off,” he said. “And we’d expect to see that sales will continue to increase because of the lowering [of] prices and because of, you know, the expansion of charging infrastructure.” 

But the removal of the tax exemption and the addition of the EV fee “essentially cut the knees off that program unnecessarily,” he said. “You’re literally basically putting up a stop sign for people that are on the fence on whether they’re buying an EV.” 

EV chargersLight-duty vehiclesNew Jersey

Leave a Reply

Your email address will not be published. Required fields are marked *