Cash incentives offer an important way to encourage electric-car adoption, and California has one of the more generous programs.
A $2,500 rebate for new battery-electric cars and a $1,500 rebate for plug-in hybrids have helped grow the number of electric cars on the state's roads.
But recently, state officials decided to make some changes to the program to encourage broader adoption.
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As funds for the program ran low, new legislation was passed to create an income cap for eligibility to participate in the rebates.
And the new income-based criteria take effect in mid-March, notes CarsDirect.
Under the new rules, individual filers listing more than $250,000 in annual income on their state taxes will no longer qualify for the battery-electric and plug-in hybrid rebates.
Tesla Store Los Angeles [photo: Misha Bruk / MBH Architects]
That also applies to head-of-household filers with more than $340,000 in annual income, and joint filers making more than $500,000.
However, buyers in these categories still qualify for the $5,000 rebate for new hydrogen fuel-cell cars.
At the other end of the spectrum, buyers making less than 300 percent of the Federal Poverty Limit--currently $35,310 for individuals and $60,270 for a family of three--will get larger rebates.
For this group, rebates increase to $4,000 for battery-electric cars, $3,000 for plug-in hybrids, and $6,500 for fuel-cell cars.
Buyers whose income falls between those markers are unaffected.
They'll still be eligible to apply for the $2,500 purchase rebate for battery-electric cars, $1,500 for plug-in hybrids, and $5,000 for fuel-cell cars, just as before.
2016 BMW X5 xDrive40e
Regardless of the California rules, all electric-car buyers are still eligible for a Federal tax credit of $2,500 to $7,500 (depending on battery size), which is unaffected by state policies.
The change in California policy is another blow to affluent plug-in hybrid buyers, as the state also recently exhausted its supply of "green stickers," which allow solo carpool-lane access for these vehicles.
The limit of 85,000 green stickers was reached last month, but there is still an unlimited supply of "white stickers" for battery-electric and hydrogen fuel-cell cars.
Ironically, this--along with the rebate income cap--occurs just as several luxury plug-in hybrid SUVs hit showrooms.
Those include the 2016 BMW X5 xDrive 40e, Mercedes-Benz GLE 550e, and Volvo XC90 T8 Twin Engine. An Audi Q7 plug-in hybrid is expected to follow them sometime next year.
They're all likely to be purchased by wealthy buyers who may no longer qualify for a rebate.