Lawmakers in Virginia have passed a bill offering consumers a sizable rebate for buying electric vehicles — but without the funds that would put the money in people’s pockets.

The legislation, HB 1979, offers buyers an immediate $2,500 rebate when purchasing a new or used EV. An “enhanced rebate” of $2,000 is also available for purchasers with household incomes of less than 300% of the current poverty rate, $37,470 for an individual or $77,250 for a family of four.

The House of Delegates originally passed HB 1979 with $5 million set aside for rebates and administrative costs. But the Senate stripped away the funding, and the bill remained unfunded coming out of conference, said Del. David Reid (D), the bill’s sponsor.

Gov. Ralph Northam has until March 31 to sign the bill into law as is.

“This bill is part of a comprehensive program to address the supply, demand, infrastructure and funding components of a broader electric mobility transition, with a particular focus on helping low-income Virginians,” Reid said in an interview with NetZero Insider.

But budget curtailing brought on by the COVID-19 pandemic forced lawmakers to make hard decisions when funding bills to reduce carbon emissions in the transportation sector. HB 2118, which would create a grant program to help Virginia schools replace diesel school buses with electric ones also passed the General Assembly, but with the proviso that it could only use federal or other non-state funds. It is currently awaiting action in the Senate. (See Rural Virginia School Districts Skeptical of Electric Buses.)

Republican opposition to the rebate program was fierce as it moved between chambers. Many rural Republicans said HB 1979 favors Northern Virginia, which has the highest numbers of EVs in the state, at the expense of other areas with a less robust charging infrastructure.

Del. R. Lee Ware (R) said he “disagrees with the underlying premise” of the bill “that we ought to incentivize these purchases at the levels of millions of dollars.”

Del. Terry Austin (R) described the bill as “somewhat unfair.” Citing personal experience, Austin said that during his 175-mile drive from his home in Botetourt County to Richmond, he doesn’t have time to stop and charge his vehicle. “I think we’re going down a path that’s not equitable or not fair to people who cannot buy or cannot use electric vehicles,” he said.

Reid said he understands Republicans’ concerns but argued the rebates and savings on fuel and maintenance for EVs should attract middle- and lower-income families, which will, in turn, increase deployment of charging stations, including DC fast chargers that can top up an EV battery in 20 to 30 minutes.

Virginia currently has about 2,000 charging stations, mostly in Richmond and Northern Virginia, and a recent study from the Department of Transportation rated the state as not yet ready for mass EV deployment.

Reid hopes his bill will dispel the myth that EVs are only for high-wage earners. With rebates, a reliable used EV would be within the budget of most middle- or lower-income Virginians, Reid said.

For example, Carvana, an online car dealer, has used Nissan Leafs listing for around $11,000; the $4,500 in rebates offered under HB 1979 would bring the cost down to $6,500, a price range affordable for most people, he said.

Reid also noted that most EVs are charged at home at a much cheaper cost than gasoline or diesel. Additionally, maintenance costs for EVs are lower than for vehicles with an internal combustion engine, saving owners hundreds of dollars a year, he said.

Rebates Critical for Success

As of 2017, 48% of Virginia’s carbon emissions come from transportation, versus 29% for the electric power sector, according to the U.S. Energy Information Administration. The state’s Democrats view EVs as key to reducing transportation emissions; they provide “the most gains now in terms of getting carbon out of the atmosphere,” Reid said.

Even with EV prices coming down, supporters say that rebates are critical tools in the transition from gasoline to electric. The National Conference of State Legislatures now lists 45 states as offering various incentives for EVs and plug-in hybrids. While Virginia does not offer cash incentives, the state does exempt EVs from emissions inspections, and the local utilities offer rebates and special charging rates for customers installing home chargers, according to NCSL.

Federal tax credits of up to $7,500 are also available for most EVs and plug-in hybrids, except for Teslas, which no longer qualify for the credit.

“At the moment, EVs are more expensive vehicles, and rebates help them sell,” said Don Hall, president and CEO of the Virginia Automobile Dealers Association. “As we have seen in other states, such as Georgia, [when] rebates disappear, EVs stop selling.”

Blair St. Ledger-Olson, program manager with clean energy nonprofit Generation 180, told a House panel in early February that higher upfront costs remain a barrier to widespread EV purchases. “Financial incentives can help bridge the price gap,” she said.

As of Dec. 31, 2020, out of 8 million cars on the road in Virginia, only about 24,000 were EVs or plug-in hybrids. according to the Department of Motor Vehicles. A Generation180 survey found that 53% of Virginians said they are likely or highly likely to consider an EV if they were to buy a car within the next two years, and 71% support the state providing incentives.

Another study by the Virginia Department of Mines, Minerals and Energy found that a comprehensive rebate program would cost the state about $43 million. An early draft of HB 1979 set the rebate budget at $20 million, a figure both parties said was prohibitive in the era of COVID-19. After “redefining success,” Reid sought $5 million this year, with approximately $1 million going toward administrative costs, according to the bill’s language.

Should Gov. Northam sign the bill into law without funds, Reid sees other options. Northam could add funding to the bill during a special session or use state taxes and fees on transportation or the universal service fee, Reid said.

Virginia expects to receive about $6.7 billion from the recently passed federal stimulus package, according to figures from the U.S. House Oversight and Reform Committee. “I really do hope we find a source of funding,” Reid said. If not, he intends to reintroduce funding legislation in the next regular session.