SACRAMENTO — Gov. Gavin Newsom’s plan to spend $1.5 billion to speed up California’s move to electric vehicles would amount to a sharp change in the state’s strategy on who should receive subsidies for zero-emission cars.
Newsom wants to erase most state funding for a popular rebate program for new-car buyers, money that has overwhelmingly gone to drivers with annual incomes above $100,000.
Instead, he’s asking lawmakers to spend big in two other areas: building a large network of vehicle charging and refueling stations, and increasing subsidies to help lower-income buyers afford the higher price tag of electric models.
The governor said his strategy would show that “it’s not just about expensive, fancy cars, and the rest of us are left behind.”
Newsom’s plan, part of the fiscal 2021-22 budget he submitted to the Legislature, would combat a perception problem California faces with electric cars — that they are luxury items for the elite. Rebranding them as accessible to all buyers will be key as Newsom tries to find ways to fulfill his executive order to end the sale of new gas-powered cars starting in 2035.
Some environmentalists who have criticized Newsom’s approach in the past said the proposal appropriately puts the focus on equity and on infrastructure projects that could create jobs.
But Newsom faces opposition from Republicans and some moderate Democrats who say spending heavily to promote electric-car usage is foolhardy when people are suffering due to the pandemic and economic crisis.
The governor said his proposal is urgent because California doesn’t have much time to claim its place as a “dominant” global player in the electric-car sector or to reduce climate-changing emissions that fuel catastrophic wildfires.
“This is where the world is going,” Newsom said when he unveiled the plan this month. “You want to be big, you got to be big in big things. Nothing bigger than low-carbon, green growth.”
One of the biggest hurdles to Newsom’s goal of phasing out gas-car sales is range anxiety, the fear of being stranded on the side of the road with a spent electric car and no charging station nearby. California has a shortage of public-charging stations, with about 61,000 fewer charging ports than the state expects it will need in the next five years.
Newsom wants California to borrow about $1 billion to ramp up construction of charging stations. The state would repay the debt with revenue from extending a $2 fee on vehicle registrations.
Drivers pay the $2 fee every year as part of registering their cars. Separately, Newsom also proposes to extend a $4 registration fee on vehicles that are eight years old or newer, which would fund other clean-air programs. Both fees are set to expire in 2024, and Newsom wants to extend them until 2046.
Kathryn Phillips, director of the Sierra Club California, one of the state’s largest environmental groups, said the plan is a vast improvement over Newsom’s last budget, when he pushed to cut several eco-friendly programs.
“He’s probably learned that the environment is really important to Californians and the Legislature,” Phillips said. “The earlier we can get the reduction in emissions, the better. Timing is everything in climate.”
The Coalition for Clean Air, an advocacy group focused on air quality, similarly praised Newsom for “putting his money where his mouth is” on clean transportation spending.
While Newsom’s plan has eased tensions with some environmentalists, he must get approval from the Legislature. That could be a tough lift, with some lawmakers in his party already attacking the effort.
Assembly Member Jim Cooper, D-Elk Grove (Sacramento County), said electric vehicles aren’t a priority for most working people. He noted that about 72% of recipients of the state’s rebates had a household income above $100,000, according to a Chronicle analysis.
“We’re paying people to buy cars, yet people are homeless and they’re being forced to sleep in their cars,” Cooper said. “It can’t get any more ironic than that.”
Assembly Member James Gallagher, R-Yuba City (Sutter County), said Newsom could face a bipartisan push to redirect some electric-car money to forest management. Newsom proposes spending an additional $1 billion to make forests and communities more resilient to fires.
“The feeling is it’s extremely tone deaf,” Gallagher said of the governor’s electric-car plan.
Newsom said his latest approach to electric-car subsidies would put low-income buyers in the front seat by expanding programs that seek to spread the benefits to all communities.
He proposes spending $465 million from cap-and-trade auction revenue to help people buy electric cars. The money includes $150 million to support Clean Cars 4 All, a grant program that gives low-income buyers up to $9,500 to trade in their gas cars and buy new or used electric models.
Newsom’s plan also includes funding to help local governments and businesses buy large zero-emissions vehicles, including buses, medium and heavy-duty trucks and machinery — all major sources of the dirtiest forms of air pollution.
“We want equity to be a principle of this effort,” Newsom said. “Remember, this is a climate move, not just an economic move.”
Bill Magaven, policy director of the Coalition for Clean Air, said critics of the governor’s proposal have unfairly portrayed it as a handout for wealthy buyers. In reality, he said, the plan would take money away from those buyers’ rebates.
In past years, California typically set aside $200 million or more for rebates that often go to higher-income buyers. Newsom has proposed adding no new money to that pot, which now has about $52 million in it.
“The governor is looking out for the most vulnerable people and communities in California,” Magaven said. “Those are the communities that are hit the most by air pollution, by climate change and by the recession.”
Buyers with higher incomes would still be able to receive rebates until the money runs out. They can also receive a new $1,500 discount at the dealership when they buy a new electric car, through a program funded by electric utilities. And federal tax credits are also available to buyers of many models.
Dustin Gardiner is a San Francisco Chronicle staff writer. Email: dustin.gardiner@sfchronicle.com Twitter: @dustingardiner
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