Overcoming the Inequity of EV Ownership in Maryland
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The recent National Climate Assessment has made clear that human-induced climate change has devastating effects. The I-95 Corridor of Maryland has been an ozone nonattainment area because of ground-level ozone experienced during our hot summers. Concerns over automobile based greenhouse gas emissions and poor air quality have induced the State of Maryland to set a goal of 300,000 electric vehicles (EVs) by 2025. According to the Motor Vehicle Administration (MVA), the total number of registered EVs grew from 609 in FY 2012 to 15,074 in FY 2018. There is a long way to go to reach that goal, so federal and state governments have provided financial incentives for purchasing EVs.
Buyers of new EVs are currently eligible for a federal tax credit of up to $7,500 and state excise tax rebate of $3,000. State tax rebate eligibility is now capped at $63,000 purchase price; research shows that buyers of high-end luxury EVs are not influenced by financial incentives, but if your new EV costs $63,000 or less you are eligible for them. Further, Maryland EV owners, depending on the technology, pay little or no motor fuel tax to the state’s transportation trust fund. There are significant monetary incentives for purchasing a new EV, but none for purchasing a pre-owned one.
My colleagues, Hyeon-Shic Shin, Amirreza Nickkar, and I at Morgan State University analyzed data from a survey we conducted with the help of the MVA. MVA identified 4,282 EV (non-fleet) owners by county in summer 2016. They notified the owners by letter of survey objectives and a web link to our on line survey. We received 1,323 responses.
We found that EV owners are white (85%), male (75%), well educated, affluent (80% >$100,000 household income), older, urban/suburban oriented, and environmentally conscious; they charge at home and use the EV to commute to work (similar to findings in other areas of the country). “Environmental concerns” is the most important factor for purchasing and driving an EV; “price and status” is the second most important factor; “efficiency and performance” of the EV is the third most important. EV owners with lower household income (<$100,000), the remaining 20%, are younger, exurban/rural oriented, and concerned about price and status of the EV. Government at state and federal levels has been subsidizing mostly affluent households to purchase new EVs, which opens up a huge equity issue.
As an additional incentive to increase EV market share, the state, under the last administration, committed to placing charging facilities at Maryland Transit Administration (MTA) commuter rail and light rail stations with parking spaces in Baltimore and Central Maryland. Remarkably, no charging facilities were planned for Washington Metropolitan Area Transit Authority (WMATA) METRO rail stations in Montgomery and Prince George’s Counties, despite those counties having high concentrations of EV owners. WMATA’s contracts for parking didn’t allow for charging facilities within the state’s time frame, so funding was instead allocated to additional MTA sites around Baltimore without consideration of commuter demand.
The state probably assumed that EV owners would be rail transit users when commuting to work, because they are environmentally conscious. However, our survey found that very few EV owners used rail transit for commuting to work prior to EV purchase (5%), and even fewer after purchase (2.6%). Yes, we confirmed that most EV owners are environmentally conscious, but they probably believe they’re contributing to environmental quality by owning an EV. As more employers add charging facilities at the work site, the incentive to commute with an EV grows.
To overcome the inequity of current EV incentives, the state should concentrate public charging facilities in exurban/rural and multifamily locations, where they are scarce, and steer financial incentives toward EV taxis, shared-ride and car-sharing fleets, and pre-owned EVs, which would promote EVs to lower income households. Coupled with incentives, the state should craft educational campaigns that inform households at all income levels about the climate and air quality benefits of EV ownership.
The legislative session in Maryland that ended in April 2019, unfortunately, ignored our study’s policy recommendations. It was during this session that the price cap for state tax rebates rose from $60,000 to $63,000, about what a fully optioned Tesla Model 3 costs. While some legislators pushed for a rebate on previously owned EVs, the incentive failed to wend its way through legislative committee review. For several years a proposal that would require home owners’ associations (HOA) to allow charging stations paid for by residents has died each year. Despite attempts to work with HOA on their concerns the proposal has died again; the HOA’ bans on EV charging stations continue. The petroleum dealers association used our study’s data to argue before a legislative committee that because the state’s financial incentives were inequitable, all EV incentives should be abolished, even though the study concluded that EV incentives should be targeted toward lower income households to overcome the inequity.
Some may conclude that Maryland’s policies have regressed despite the study’s recommendations and they would be correct. However, the future may be brighter, because at least legislators and interest groups are discussing and suggesting policies that would go toward incentivizing EVs for lower income households.
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