Minnesota legislators are looking at offering new rebates as financial incentive for consumers considering electric or plug-in hybrid cars.

“It’s justified to have an early investment by the state to kick-start that market,” said Brendan Jordan, head of Drive Electric Minnesota, a coalition that aims to increase the number of electric vehicles.

The proposal, which has gained bipartisan support, would give rebates of up to $2,500 for those who buy or lease a new electric or plug-in hybrid car. The measure also would require public utility companies to create programs to encourage the use of electric vehicles and to construct charging stations for electric cars. The taxpayer-backed incentives would expire in 2021.

To pay for the rebates, the state would pull the money from solar energy subsidies.

Rep. Pat Garofalo, R-Farmington, said the funding mechanism makes sense, because electric vehicles are more efficient and reduce more pollution than solar energy.

“It’s a win-win for everybody,” said Garofalo, lead sponsor of the measure in the House and owner of a Tesla plug-in electric sports sedan. “Environmentalists get a lot less pollution and conservatives get less cost than the current program.”

The proposal is drawing criticism from legislators who say the state would be needlessly subsidizing wealthy owners, particularly when high-end electric cars like the Tesla Model S start at more than $70,000.

Critics say many initial buyers were drawn to the cutting-edge technology and are not deterred by the premium over their gas-burning rivals.

“If you don’t need an economic motive, why are we giving it to them?” asked Sen. Michelle Benson, R-Ham Lake, at a recent Senate Environment and Energy Committee meeting. “If you have an economic motive, the argument of fuel sales and lower cost over the operating life is something you’re going to understand intuitively.”

Prices are coming down

Electric cars are a rapidly evolving technology, owners and their advocates say. The prices are coming down all the time as more car companies embrace the technology and as longer-lasting batteries make the technology more useful to a wider range of motorists. Ford, Nissan and Mitsubishi offer electric cars for less than $30,000.

Minnesota is home to about 3,500 electric cars, a tiny fraction of the more than 4.6 million vehicles registered here.

Other states have been considering tax incentives for electric cars or plug-in hybrids, which are more fuel efficient than traditional gas-electric hybrids, such as the Toyota Prius.

California has switched to an income-based incentive program, ensuring that those with the lowest income get the biggest rebates. In that state, no electric-car rebates are offered to an individual making more than $250,000 or joint tax filers earning more than $500,000.

Jukka Kukkonen, founder of PlugInConnect, an electric-vehicle consulting firm, said the proposed incentives in Minnesota would get people who might not have considered an electric vehicle to look at one. “The challenge with it is really that we have been using the same technology for the last century,” he said. “This helps the consumers to take the step forward.”

The federal government already offers tax breaks of up to $7,500 to help offset the cost of electric or plug-in hybrid cars.

Rhea O’Connor drives a Nissan Leaf, one of the most affordable electric cars on the market. She said the federal tax breaks were helpful when she and her husband, Matthew Blackler, leased their two electric cars.

O’Connor is a project developer for ZEF Energy, a clean-energy company that installs high-speed charging stations for electric cars. Blackler is founder and CEO. “Would it be useful to have extra money off to make it a killer deal?” Blackler asked. “Definitely. It would be fantastic to get more people into these cars.”

Business incentives, too

Businesses are already offering green-car incentives. Some banks offer lower interest rates for electric and hybrid cars, while a growing number of insurance companies give electric-car owners a discount on their premiums.

Minnesota waded into the issue in 2014, when a new state law required investor-owned utility companies to offer discounted rates to customers who charge their electric vehicles at night.

A bill similar to Garofalo’s passed the House last year but failed to gain traction in the Senate. The Senate’s version of this year’s bill was authored by Sens. John Marty, DFL-Roseville, and Kari Dziedzic, DFL-Minneapolis.

On Saturday afternoon, O’Connor pulled into a service station in south Minneapolis and began to recharge her Nissan Leaf. With the latest fast-charging technology, she can charge her battery to 80 percent in just 20 minutes.

“The technology is evolving fast, the cars get better every year, but we haven’t arrived at the final product yet,” said Jordan, with Drive Electric Minnesota. “It’s an early introduction of technology that’s good for society.”

 

Christopher Aadland is a University of Minnesota student on assignment for the Star Tribune.