BILL ANALYSIS �
AB 1608
Page 1
Date of Hearing: April 9, 2012
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 1608 (Wieckowski) - As Amended: March 8, 2012
SUBJECT : Clean Vehicle Rebates
SUMMARY : Incentivizes the purchase of zero emission vehicles
(ZEVs) manufactured in California by increasing buyer rebates by
40% over rebates for similar vehicles manufactured outside of
California. Specifically, this bill :
1)Requires that rebates for light-duty ZEVs under the Clean
Vehicle Rebate Project (CVRP) be increased by 40% for vehicles
manufactured in California over rebates issued for similar
eligible vehicles manufactured outside of California.
2)Requires that rebates for eligible medium- or heavy-duty ZEVs
under the Hybrid Truck and Bus Voucher Incentive Project
(HVIP) be increased by 40% for vehicles manufactured in
California over rebates for similar vehicles manufactured
outside California.
3)Defines a "California manufacturer" as any sole
proprietorship, partnership, joint venture, corporation, or
other business entity that manufactures eligible vehicles in
California and meets the following criteria:
a) The owners or policymaking officers are domiciled in
California and the permanent principal office or place of
business is located in California;
b) The business or corporation owns and operates a
manufacturing facility that builds or manufactures eligible
vehicles in California; and,
c) The business or corporation is licensed by the state to
conduct business in California.
1)Specifies that having a distribution or sales management
office or facility in California does not qualify a business
as a "California manufacturer."
EXISTING LAW:
AB 1608
Page 2
1)Creates the Air Quality Improvement Program (AQIP) to fund air
quality improvement projects through 2015. Funding for the
AQIP is derived primarily from annual vehicle smog abatement
and vessel registration fees as well as other, periodic
supplements from the Public Interest Energy Research (PIER)
Program and other sources.
2)Requires that projects proposed for AQIP funding be evaluated
based on a variety of criteria including their potential to
reduce toxic air pollutants, cost-effectiveness, contribution
to regional air quality improvement, and their ability to
promote and use clean alternative fuel and vehicle
technologies.
3)Specifies that the HVIP and CVRP are designed to accelerate
widespread commercialization of ZEVs and plug-in hybrid
electric vehicles (PHEVs) by providing consumer rebates to
partially offset the higher cost of these advanced
technologies and to help meet California's climate change
goals.
FISCAL EFFECT : Unknown
COMMENTS :
California's Clean Air Vehicle Rebate Programs : The CVRP and
HVIP, established under AQIP, are two voluntary incentive
programs that provide clean air vehicle rebates for a variety of
zero emission light-, medium-, and heavy-duty vehicles. The
CVRP is funded by the California Air Resources Board (CARB) with
periodic supplements by the California Energy Commission (CEC)
and administered by the California Center for Sustainable Energy
(CCSE). Under CVRP, rebates of up to $1,500 are available for
zero emission motorcycles (ZEM) and neighborhood electric
vehicles (NEV), $5,000 for ZEVs, and up to $20,000 for
commercial zero emission vehicles (CZEV). Eligible applicants
include individuals, businesses, public agencies, private
organizations, and non-profit organizations.
According to CARB, a total of $11.1 million was appropriated
from the AQIP for FY 2009-2011 to promote the production and use
of ZEVs, including electric, plug-in electric vehicles (PEV),
PHEVs, and fuel cell vehicles. Of this $11.1 million, $2
million was provided by the California Energy Commission (CEC)
AB 1608
Page 3
on May 26, 2011. Funding from the CEC was specifically
dedicated to light-duty ZEVs capable of freeway operation. The
additional funding from the CEC came in response to the sharp
increase in demand for ZEV rebates after the Nissan LEAF was
launched in early 2011. Up until that time, CARB reported that
number of rebate applications was consistently low. According
to CARB, rebates for ZEVs were distributed throughout the state
with the majority of rebates issued in and around Los Angles,
the San Francisco Bay Area, and San Diego. According to the
CCSE, the remaining funding available in the CVRP is
approximately $6 million. Legislation has been introduced by
Assembly Member Hall (AB 2450) that would add $15 million to the
CVRP from the Public Utilities Commission using public goods
charge. The monies from AB 2450 would supplement, and not
supplant, the funding of the Clean Vehicle Rebate Project from
all other sources.
The HVIP Project is an incentive program created by CARB to help
fleets buy hybrid and battery-electric trucks and busses. The
HVIP is funded by CARB, also with periodic funding supplements,
and administered by Calstart. The HVIP provides rebates to
offset about half of the incremental cost of eligible hybrid
medium- and heavy-duty vehicles, and a portion of the cost of
battery-electric trucks and buses. In 2011, there was
approximately $18 million available for purchase incentives with
rebates for eligible ZEVs ranging from $10,000 to $30,000,
depending on the size of the vehicle. According to Calstart,
the remaining available HVIP funding is approximately $10
million.
Federal Clean Air Vehicle Rebate Programs : In addition to state
incentives, the federal government also provides incentive
programs for the purchase of clean air vehicles. The Energy
Improvement and Extension Act of 2008, and later the American
Clean Energy and Security Act of 2009 (ACES) granted tax credits
for new, eligible PEVs. Additionally, the American Recovery and
Reinvestment Act of 2009 (ARRA) also authorized federal tax
credits for PEVs. According to the U.S. Department of Energy
Alternatives Fuels Data Center, the majority of federal
incentives have been exhausted.
AB 1608
Page 4
Discussion : According to the author, less than 4% of CVRP funds
and less than one-half (40%) of HVIP funds have gone to
California-based companies. By introducing this legislation,
the author hopes to incentivize the purchase of
California-manufactured ZEVs by increasing the amount of rebate
funding that can be applied toward their purchase. By
increasing sales of California-manufactured ZEVs, the author
expects to increase the economic benefits California derives
from this industry.
Supporters of this bill agree that the bill would help create an
incentive for consumers to buy California-manufactured ZEVs
which, in turn, will help to bolster California's economy.
Supporters also cite that increasing rebates for
California-manufactured ZEVs will also help to accelerate market
deployment of California-manufactured ZEVs while helping
California implement its clean air goals. They note that while
California's ZEV industry has been hard-hit by the recession and
the additional incentive provided by this bill will help
California's ZEV industry rebound.
Writing in opposition, the Alliance of Automobile Manufacturers
(Alliance) points out that one of the CVRP's biggest challenges
is lack of funding and that this bill would exacerbate that
problem by reducing the number of rebates available. They point
out that by giving out bigger rebates, CVRP and HVIP funds will
be expended faster and result in fewer ZEVs being put on
California's roadways. With fewer ZEVs deployed, the Alliance
explains that California will have a more difficult time
reaching its clean air goals. Additionally, the Alliance points
out that while many manufacturers do not qualify as a
"California manufacturer", as defined in the bill, they do, in
fact, contribute significantly to California's economy.
Also writing in opposition, the United Auto Workers note that
this bill gives preferential treatment to "California
manufacturers" of ZEVs at the expense of non-California
producers, unfairly placing manufactures outside of California
at a competitive disadvantage. They cite that the result would
be a negative impact on the jobs of autoworkers who build ZEVs
in the United States, an industry that accounts for over 400,000
jobs.
AB 1608
Page 5
Committee concerns : AB 118 sunsets on January 1, 2016, along
with the fees that it imposed. If AB 118-like fees are
reauthorized, the use of the revenue from those fees will have
to meet more restrictive criteria established under Proposition
26 (2010) in order still to be considered a fee. Failure to
meet these more restrictive criteria will subject the
reauthorization to a two-thirds vote of the Legislature for
approval of a tax. Consequently, it may be premature for the
bill to designate specific rebate levels given that the program
is scheduled to sunset and it is as yet unclear how the programs
may be configured in the future.
Related legislation: AB 2450 (Hall) would fund the CVRP with
$15,000,000 from the Public Utilities Commission Electric
Program Investment Charge funds. That bill is scheduled for
hearing in the Assembly Transportation Committee.
AB 493 (Ruskin) of 2007, would have created a self-financing
system of fees or rebate on the purchase of new vehicles sold in
California with rebates (based on a sliding scale) for cars that
produce less emissions and fees on vehicles that produce more
emissions. That bill died in in the Assembly.
AB 2791 (Ruskin) of 2006, would have required a study of the
costs and benefits of Clean Vehicle Discount Program. That bill
died in the Senate.
REGISTERED SUPPORT / OPPOSITION :
Support
Electric Vehicles International (Sponsor)
American Federation of State, County and Municipal Employees
(AFSCME), AFL-CIO
Tesla Motors, Inc.
Zero Motorcycles
Opposition
Alliance of Automobile Manufactures
Association of Global Automakers
International Union, United Automobile Workers of America (UAW)
Analysis Prepared by : Victoria Alvarez / TRANS. / (916)
AB 1608
Page 6
319-2093