Connecticut offers EV rebates to jolt sales

Connecticut wants to teach the country how to sell electric and plug-in hybrid vehicles.

In May, it became the first state to offer cash-on-the-hood rebates for EVs or plug-in hybrids, such as the Nissan Leaf, Chevrolet Volt and Ford C-Max Energi.

"We're a small state, but we have some big ideas, and maybe we can show California how to do this" by using automaker-style customer rebates, said Jim Fleming, president of the Connecticut Automotive Retailers Association in Hartford. "It's a bit of an experiment."

The Connecticut Hydrogen and Electric Automobile Purchase Rebate program has set aside $1 million for rebates from $750 to $3,000 per electrified vehicle, depending on battery size. The rebates are on top of a $2,500 to $7,500 federal tax credit for the vehicles.

A small part of the $1 million fund is set aside for dealer cash to motivate salespeople to promote the vehicles.

When the CHEAPR program started on May 19, about 3,000 EVs were registered with the state, said a spokesman for the Connecticut Department of Energy and Environmental Protection. Through July, 125 EVs and plug-in hybrids have been sold as part of the program. Of those, 57 qualified for the maximum $3,000 rebate.

Jeff Aiosa, owner of the Mercedes-Benz dealership Carriage House of New London Inc., quickly sold out of the B-class Electric Drive when the program started. The car, with a battery capacity greater than 18 kilowatt-hours, qualifies for a $3,000 cash rebate. Aiosa is waiting to get more of the cars in stock.

"We weren't selling them heavily before," Aiosa said. "The program certainly created some amped-up demand."

Through July, about $262,500 in rebates had been claimed, said the association's Fleming. He expects the fund to last until March. But Chevrolet dealer Leo Karl believes the rebates will expire by fall because of increased momentum in sales.

Karl Chevrolet in New Canaan, Conn., sells about 700 new and used vehicles a year. It had 12 Chevrolet Volts in stock on May 18. The 2015 Volt qualifies for a $1,500 rebate; the 2016 will qualify for $3,000.

Leo Karl, president of the dealership, sold nine 2015 Volts under the program, including six to customers trading in vehicles of other brands. He expects his remaining Volts in stock will sell out soon.

"CHEAPR just makes it more understandable at the consumer level because it's money on the hood. It fits, it feels right and it makes it simple," Karl said. "That is why it's helping more people take a look at EVs."

Because dealers get to keep $150 to $300 of the rebate on each sale to motivate salespeople to promote electrified vehicles, the improved sales are boosting dealership profits. Rising sales also mean more sales tax revenues for the state, proponents say.

"This is the type of program that can be a win-win-win for the state, auto manufacturers, dealers and consumers," Karl said.

Fleming said if Connecticut's program is a hit, he will push legislators for additional funding when the initial $1 million runs out. "That's tough to do," he said, "but we will try to find money from other sources to fund it."

Connecticut is one of 14 states following the stringent clean-air standards set by the California Air Resources Board, Fleming said. Connecticut has targeted cumulative sales of nearly 300,000 zero-emission and hybrid vehicles by 2025, he said.

Faced with that goal, Fleming partnered with the Connecticut Department of Energy and Environmental Protection about a year ago to develop a program that would encourage consumers to buy electrified vehicles and dealers to push them.

"We decided to model it on what works. And what works is what manufacturers do now when they want to provide an incentive to buy cars," Fleming said. Cash "on the hood makes consumers want to buy the car because they see the immediate benefit."

Massachusetts, which also follows CARB's standards, has a similar rebate program, but the consumer must apply for the rebate and wait for a check, said Bob O'Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association in Boston. The rebate, based on battery capacity, ranges from $1,500 to $2,500.

Massachusetts' program started in June 2014, with $2 million in funding that had come indirectly from a cooperative effort by nine states to reduce greenhouse gas emissions. The state approved an additional $2 million from the same fund this June to extend the rebate program, O'Koniewski said.

"The burden is on the consumer to do the work to apply for and receive the rebate. We wanted to make sure there was not a bureaucratic step that would fall on the dealer," he said.

"It's been a good first step. Consumers across all the manufacturers are taking advantage of this."