Money for electric vehicle rebates appears unlikely

Prospects for funding Virginia’s electric vehicle rebate program, which was created in 2021 but never given any money, appear dim.

Neither the Republican-led House of Delegates’ proposed budget for the next two years nor the Democrat-led Senate’s include any funding for the EV rebate program, despite requests by Del. David Reid, D-Loudoun, and Sen. Jennifer McClellan, D-Richmond, to put $40 million toward the initiative both this year and next. 

Program funding has also failed to gain much traction with the executive branch. Former Democratic Gov. Ralph Northam included no money for electric vehicle rebates in his outgoing biennial budget, and while Reid said he had met with Republican Gov. Glenn Youngkin’s team, “it seems evident that it’s not something that the current administration is interested in pursuing.”

“I think it’s a missed opportunity,” he said. 

While the House and Senate budgets include no rebate funding, however, both include varying amounts for electric vehicle infrastructure. The Senate is proposing $10 million to seed a new fund overseen by the Virginia Department of Energy that would offer grants to help developers build electric vehicle charging stations in economically distressed areas of Virginia. The House is proposing $5 million for a different fund to be administered by the Virginia Tourism Authority that would provide grants for EV infrastructure in rural areas. 

Disagreement over state use of rebates

Reid, who championed the 2021 legislation establishing the rebate program, argued that rebates could serve as a marketing tool for Virginia to attract large battery and electric vehicle manufacturers to build factories in the commonwealth. 

As U.S. companies ramp up EV production, they are rolling out plans for new factories nationwide, with projected capital investments totaling in the billions. 

Both he and Don Hall, president and CEO of the Virginia Automobile Dealers Association, also contended that rebates are key to efforts to increase electric vehicle ownership in Virginia. 

Last year, the auto dealers threw their support behind Democratic legislation to adopt California vehicle emissions standards, which are more stringent than federal standards. (Under the Clean Air Act, states are allowed to adopt either California or federal vehicle emissions standards but may not craft their own.) 

Hall said that “if the commonwealth truly wants to implement” the California standards, “then EV purchasing incentives must be part of the solution.” 

Republicans, however, have been skeptical of rebates, criticizing Democrats’ efforts to promote EV adoption as government intervention in the marketplace. 

“Why do we need to put $40 million a year into rebates if the market itself is traveling in the right direction?” Del. Michael Webert, R-Fauquier, asked during a House floor debate Feb. 14. “The answer is we don’t.”

Nor do all Democrats support the idea. Del. Sally Hudson, D-Charlottesville, an economics professor at the University of Virginia, argued against rebates in 2021 and said there’s little evidence that the policy tool significantly drives up EV sales. 

“I think this is effectively a subsidy that’s targeted at a rung of the income ladder,” she said, adding that she believes state money could be better spent on other solutions. 

Reid on Tuesday defended the rebate program that was set up in 2021 as “one of the best rebate programs in the nation because it really does address those issues of equity.” 

“It makes sure the money’s not just going to the high earners in the state. It’s applicable to both used and new cars,” he said. “It really is a good program and it’s just unfortunate that both the outgoing administration as well as the current administration has chosen not to fund it.”