When Graciela Deniz worked as a health educator at a medical office in Kerman, California, it seemed like all the doctors drove Teslas.
Deniz, 32, assumed electric vehicles were a luxury reserved for those with high incomes, until she started a new job last year as a community health worker at the Central California Asthma Collaborative. The organization was involved with the EV Equity program, an initiative to help low-income residents in the San Joaquin Valley buy electric vehicles.
By switching to an EV, Deniz hoped to save money on gas and reduce her contribution to the San Joaquin Valley’s high levels of air pollution, which contribute to some of the highest asthma rates in the state. Right around that time, her own daughter was diagnosed with asthma. “I knew about the link between the environment and health,” Deniz said. “But that was when it really came full circle for me.”
The EV Equity program helped Deniz find an electric vehicle that fit her needs and guided her through the process of applying for two income-based grants from California’s Driving Clean Assistance Program (DCAP) and the Clean Vehicle Rebate Project (CVRP). She received a total of $9,500 for a down payment and purchased a Chevrolet Bolt EUV in July 2021. With one fewer gas-powered car, Deniz and her husband were able to cut their fuel budget by half.
But much has changed since Deniz purchased her EV – two of the state-funded assistance programs for low-income buyers have shut down after running out of money. The average price of an EV in the US reached $66,000 this summer, and lower earners are struggling to compete for cars in a hostile market with high markups and sparse inventory. Strong demand for EVs has been exacerbated by gas prices that again averaged as much as $6.43 a gallon in California last week.
As California undergoes an ambitious transition to electric vehicles – in August, the state announced it would ban the sale of new gas-powered vehicles by 2035 – low-income Californians are at risk of being left out of the electric vehicle transition, despite having the most to gain from it. EVs are less expensive to power and to maintain, they are more reliable, and they don’t contribute to air pollution, which disproportionately affects disadvantaged communities. But as financial assistance programs confront challenges and market pressures intensify, those who need them most risk being left behind.
Low-income Americans face higher burden – and greater need
Low-income households in the US spend a much higher percentage of their income on transportation. According to the Bureau of Transportation Statistics, the lowest quintile of households in terms of earning spent 26.9% of their income on transportation in 2021, almost twice the nationwide average of 13.9%.
This economic burden is being exacerbated by the sharp rise in gas prices. “Inflation is crazy, and they don’t have enough money to be paying for gas,” said Irvin Rivero, beneficial electrification associate at Acterra, a Bay Area non-profit that helps income-qualified buyers apply for the incentive programs. “And if they’re low-income, they usually tend to travel pretty far to their work, so they’ll be filling up a lot.”
Lower earners also tend to drive older cars that are prone to breaking down. “People have told us that because they didn’t have a reliable car, they’ve actually been written up at work for being late, or fired,” said Veronica Valencia, program manager at Valley Clean Air Now (Valley Can), a non-profit that administers the Clean Cars 4 All (CC4A) vehicle replacement program in California’s San Joaquin Valley.
By needing fewer repairs and eliminating the need to spend money on gas, oil changes, and engine repairs, EVs can be a valuable tool in promoting upward mobility for low-income households. “We’ve actually received emails saying, ‘Now that I have a reliable car, I was able to get a better job, I got a home.’” said Valencia. “They’re succeeding.”
But EVs are still largely unaffordable for lower earners, even if they are pre-owned. The average price for a used EV surpassed $40,000 this July, according to Recurrent, a tech startup in the used-EV industry. Financial assistance in the form of upfront grants can provide a crucial way to close the affordability gap.
Hundreds of millions in aid – but not enough
California has spent more than $400m on various incentive programs to help lower-income drivers purchase zero-emission vehicles. There is the CC4A program, which offers up to $9,500 toward a down payment for an electric vehicle if the applicant turns in a vehicle older than a 2005 model. CVRP offers a $4,500 rebate on new EVs to income-qualified applicants. Before closing down in 2021 due to funding issues, the Clean Vehicle Assistance Program (CVAP) offered $5,000 grants toward the down payment of a used or new zero-emission vehicle. There are also various incentives provided by local governments and utility companies.
“Sometimes you can get a used EV for free if you really qualify and stack the grants,” said Linda Hutchins-Knowles, e-mobility and advocacy senior manager at Acterra.
But that would require knowing the programs exist in the first place, being able to identify all the grants for which one qualified and successfully navigating the application process. Organizations like Acterra and Valley Can run grassroots campaigns to increase awareness about the programs in disadvantaged communities and offer language and computer assistance to help people apply to them.
“You have to have time to educate yourself, to apply, to follow up, to submit the paperwork, and that’s an onerous thing for somebody who is working two jobs just to pay the rent,” said Hutchins-Knowles.
She said the frustration is amplified when someone invested the time to go through the application process, only to find out that money had run out.
Max Pérez was in the market for his first car after he graduated from college in 2020. He wanted to buy an electric vehicle to mitigate his carbon footprint. After attending one of Acterra’s informational workshops, he applied for the CVAP $5,000 grant and received a letter a few months later. The program had run out of funds and was temporarily shutting down. About 3,200 people were waitlisted.
“I was pretty disappointed,” said Pérez, 24, of Alameda, California. “I could have financed for just one year and been finished paying for it.”
There was another grant program available – the Driving Clean Assistance Program, or DCAP – but Pérez found the application too complicated and gave up. He eventually scraped together a down payment and financed a longer loan for a used Chevy Bolt. Last month, DCAP ran out of money as well.
Even before the down-payment assistance programs closed, the incentive money was not always enough, and some programs did not meet the needs of disadvantaged communities. A $7,500 federal tax credit helped very few low-income buyers, because they already paid little to no tax. The CVRP $4,500 rebate was only available after purchasing a car, and most low-income buyers needed upfront assistance to afford a down payment. The CVAP program gave grantees 60 days to purchase a car – but an extremely competitive car market has made finding a qualifying EV in that timeframe nearly impossible.
Quentin Nelms, 43, a low-voltage technician for the Tulare school district in the San Joaquin Valley, qualified for the $5,000 CVAP grant in January, before the program closed. But when he began shopping, Nelms found that the prices of EVs at dealerships that participated in the grant program were marked up by as much as $12,000.
“I started telling the dealers, ‘I don’t think it’s fair that you guys are part of this program and you are now charging a markup,’” he said, “‘because I put in time and work into this grant program and you’re absorbing the whole grant.”
When Nelms didn’t find a car in the 60-day window, the program gave him a six-month extension. By August, Nelms still had not found an available car within his budget. He will have to wait until the CVAP reopens to apply again.
Thousands on the waitlist
The California air resources board (Carb) runs the state’s electric vehicle incentive programs, and agency representatives said they were working to reform the incentive programs and to address the issues that caused some of them to close prematurely.
Carb representatives and equity advocates said the rapid depletion of CVAP and DCAP money was largely because so many people whose incomes were close to the maximum threshold – 400% of the federal poverty level – applied that there were no funds left for people with the highest need.
“A first-come, first-served model doesn’t prioritize anything,” said Lisa Macumber, air resources supervisor with Carb. “Moving away from that model is really important to prioritizing equity.”
Macumber said that when the CVAP program reopened, it would use a needs-based model that puts the lowest-income applicants at the front of the line. It would also consolidate two of the programs, so that applicants need to fill out fewer applications. High-need applicants would be assigned a case manager to help them apply, and grant amounts would increase so those with the highest need could qualify for as much as $15,000 in upfront assistance.
Macumber said she hoped the CVAP program would reopen in spring 2023.
Meanwhile, interest in EVs among the highest-need buyers continues to grow. Valley Can said it had a waitlist of about 1,500 completed applications for the vehicle replacement program, with another 1,500 applications being processed. To increase equitable access to EV charging, Valley Can is also working with the state on a new pilot program that distributes preloaded bank cards to help drivers pay for public charging.
As for Deniz, six months after purchasing her Chevy Bolt EUV, she is still happy she made the change. “I definitely did not have any buyer’s remorse,” she said.
Last month, she and her husband took their daughter on a trip to the central coast. “In our Jeep, just the gas for that trip would have been a couple hundred dollars.”
