Pub. 21 2022 Issue 2

President’s Message: New Jersey’s EV Incentive Program Has Been A Mixed Bag

The Charge Up New Jersey Electric Vehicle (EV) Incentive Program is expected to reopen for its third iteration sometime in 2022. While New Jersey’s franchised car and truck dealerships support the program and have been active participants, the program administration has been a mixed bag. There is no doubt the Program has driven demand for EVs in New Jersey, but the on-again, off-again nature of the incentive, long wait times for reimbursement and other administrative shortcomings have left a lot to be desired by participating dealers. Over the past two years, we have learned what worked, what didn’t work, what is popular with consumers and what could be improved.

Year One of the Charge Up New Jersey EV Incentive was a post-purchase program. Consumers who purchased an eligible EV applied to be reimbursed for up to $5,000, depending on the range of their plug-in vehicle. The Program ultimately doled out more than 8,400 total incentives, with 83% of the incentives going to Tesla purchasers and the remaining 17% spread out among several franchised brands. Unfortunately, the program exceeded its $30 million budget by nearly $10 million, $7 million of which came out of the Year Two budgeted monies.

In Year Two the Board of Public Utilities (BPU) converted Charge Up New Jersey to a point-of-sale program and introduced a tiered incentive. Consumers who purchased eligible EVs with an MSRP of less than $45,000 were eligible to receive up to a $5,000 incentive. Eligible EVs with an MSRP between $45,000 and $55,000 were eligible to receive an incentive up to $2,000. Participating dealerships applied the appropriate incentive at the point-of-sale, essentially paying the incentive for the consumer, and then applied to be reimbursed by the BPU and its program administrator, the Center For Sustainable Energy (CSE). The Program approved nearly 3,800 incentives. Another 1,200 reimbursements are still pending delivery of vehicles ordered in 2021. Tesla’s share of the incentives dropped to 66% in Year Two, while the franchised dealership share doubled to 34%. Excessive delays in reimbursements during the second phase harmed the participating dealerships, with many payments taking 60 days or longer.

Now, we are waiting on a launch date for Year Three of the Program. NJ CAR had been asking the BPU and CSE to engage in meaningful conversations regarding the ongoing development of this critical program since the second phase ended on Sept. 15, 2021. Regrettably, those conversations never happened and, as a result, the Budget and Straw Proposals recently released by BPU were developed without the benefit of input from dealers.

The proposal does not adequately address the lessons that should have been learned from the administrative failures of the first two phases. The administration of the first two phases of the EV incentive program faced fundamental challenges that NJ CAR hopes can be avoided in future phases. Most notably, the Coalition wants BPU to eliminate the spontaneous “on/off” cycle of the program which makes it unreliable and confusing for consumers and undermines automakers’ and dealers’ planning, distribution and marketing efforts.

Funding for the program also needs to be increased. In fact, proposed legislation is in the works that would pull forward some of the remaining $240 million earmarked for the program. The $30 million annual funding level is inadequate, given consumer interest in the program. Not only is the on-again/off-again cycle of the program confusing for consumers, dealers and manufacturers, but the inadequate funding also undermines Governor Murphy’s goal of getting 330,000 EVs on New Jersey roads by Dec. 31, 2025.

NJ CAR has also taken issue with the BPU’s proposed “no mark-ups” above MSRP disqualifier. The statute clearly authorizes BPU to limit incentives to vehicles with an MSRP of $55,000 or less. A “no mark-up” policy that imposes price control on local businesses but does not also impact the manufacturers’ ability to raise MSRP is a real problem. The policy fails to protect consumers and imposes financial hardship on Main Street businesses while allowing automakers complete freedom to price gouge. The policy allows manufacturers, like Tesla, to take full advantage of the current sellers’ market but would prevent local businesses from doing the same. If the goal is consumer protection, price controls should also be imposed on original equipment manufacturers (OEMs) and any vehicle with a transaction price below $55,000 should be eligible (dealer mark up or not).

Finally, the BPU seems to be ignoring the unusually low inventories on dealership lots throughout New Jersey due to the ongoing chip shortage and other component parts shortages. Any rational businessperson knows that, when demand exceeds supply, there is no need to push products with incentives. Incentives work best when supply is high and demand is low. While dealers are very encouraged by consumers’ ongoing interest in EVs, right now the market does not favor consumers.

NJ CAR has urged BPU to hold off on restarting the incentive program until later in 2022 when:

  1. Inventories are expected to build;
  2. Dealers and manufacturers can plan marketing and promotional activities to coincide with increased inventory and incentive dollars;
  3. Federal tax and EV incentive programs are known; and
  4. Supplemental appropriations, beyond the $30 million minimum incentive, can be raised to ensure the program can remain open year-round.

The BPU must incorporate solutions to the shortcomings found in its first two years of the Charge Up New Jersey EV Incentive Program, to ensure the best possible program going forward.