Sign Up for My Free Newsletter Subscribe

Guess Who’s Buying ZEVs in California?

09.13.17 | Blog | By:

Yesterday the California Air Resources Board (CARB) held a seminar on the results of a recent study on factors that influence zero emission vehicle (ZEV) sales conducted by the UCLA Luskin Center for Innovation. The study team found that early plug-in electric vehicle (PEV) sales were concentrated in neighborhoods with higher socio-economic status and that these early-adopting neighborhoods continued to purchase PEVs at a higher rate than neighborhoods that adopted them later. Household income, housing value, and the presence of single family homes have a large and positive correlation with PEV sales, shown in the chart below.

A neighborhood’s proportion of multi-family homes exhibited a negative correlation with PEV sales. Regional PEV sales patterns were also seen: residents of the San Francisco Bay Area show a higher propensity to purchase battery electric vehicles (BEVs) relative to plug-in hybrid electric vehicles (PHEVs), while residents of the Los Angeles region exhibit the opposite propensity.

Policies designed to induce and support PEV purchases were found to be positively and significantly associated with higher PEVs sales, according to the study. The state program that permits drivers of single-occupancy PEVs to access HOV (high occupancy vehicle) lanes (also referred to as carpool lanes) has a strong positive association with increased PEV sales in communities near HOV lanes. State and federal differentiated BEV and PHEV rebates are critical factors in the early market growth, the study found. And, targeting of rebates to lower-income households would increase cost effectiveness and equity outcomes. The Clean Vehicle Rebate Project that offers incentives for the purchase of eligible PEVs was also shown to be positively correlated with additional PEV sales, and rebate policy approaches that can enhance program cost-effectiveness and allocative equity were identified.

Basically, to get lower-income people to buy a ZEV, they’ll need a bigger rebate, the study says. And, my take: overall ZEV costs have to come down further — and not just to Tesla Model 3 levels. There are only so many people who are rich in the California (and the U.S.) who want to buy an EV. And there are so many in an upper socioeconomic situation. Consider these facts: a recent article in the Washington Post highlighted that 50% of all Americans are paid less than $18/hour.  Forty percent of jobs pay just $15.50/hour. Median household income, a good gauge of middle-class pay, peaked in 1999. The bottom half of U.S. workers haven’t seen their pay rise 5% over the period 2000-2017. I can assure you they are not concerned with the lofty (though worthy) goal of transport decarbonization or EVs. They are concerned about survival.

Moreover, a third of white working-class Americans said that they have cut back on food or meals in the past year to save money, according to another article in the Post exploring the connection of mass economic hardship to President Trump’s election win. A similar share said it would be difficult — if not impossible — for them to cover an emergency expense of $400. It’s clear to me that even a $30,000 EV is simply out of reach for the average consumer in the U.S. So there’s going to need to be a heck of a rebate and a heck of a cost decrease to get EV uptake really going, and I’m doubtful you can get real EV uptake really going without attracting Americans in this group.

 

Tammy Klein is a consultant and strategic advisor providing market and policy intelligence and analysis on transportation fuels to the auto and oil industries, governments, and NGOs. She writes and advises on petroleum fuels, biofuels, alternative fuels, automotive fuels, and fuels policy.

Print Friendly, PDF & Email