One of the biggest sellers of electric vehicles in Vermont is using a state-funded incentive program to not only reach first-time buyers but to help existing e-vehicle owners upgrade to newer models.
The practice by Freedom Nissan in South Burlington is legal but appears to benefit from a loophole and runs contrary to the intent of the program — to expand the number of people on the roads driving electric vehicles, or EVs. The e-vehicles turned back in don’t always stay in Vermont, experts said.
“It sounded fishy to me because this subsidy is supposed to put new EV drivers on the road, not upgrade people to better electric cars,” said Rob Goodwin, a Montpelier resident who started leasing a Nissan Leaf from the dealership last summer. Applying a federal and a utility incentive to the lease “made the numbers work” for him to drive electric, Goodwin said.
According to Goodwin, Freedom Nissan called him several weeks ago to say that the dealership could upgrade him to a Nissan Leaf Plus for the same price as his current lease by using the new state incentive. Goodwin said the offer was “enticing” because the model has a higher range than his current vehicle; the Nissan Leaf Plus gets up to 226 miles on one charge compared to 149 miles from the standard model.
Seth Quittner, a salesperson at Freedom Nissan, confirmed in a phone interview that the dealership had called customers with Leaf leases to see if they would like to upgrade to a new model. When asked whether any of the state incentives used by Freedom Nissan customers had gone toward lease upgrades, he said “absolutely.”
Quittner was not able to provide firm numbers and referred further questions to the dealership’s owners, who could not be reached for comment.
Freedom Nissan sold the second highest number of Leafs in the country during a $10,000 rebate offer in 2017. Unsurprisingly, the South Burlington dealership is leading the pack for having the most customers who have used the state EV incentives so far. Of the 44 incentives used as of Jan. 29, 17 have been used by Freedom Nissan customers, worth a combined $67,500.
Gov. Phil Scott and lawmakers agreed last session to put $1.1 million toward a low and moderate income state electric vehicle incentive in an effort to reduce greenhouse gas pollution and lower fuel costs.
With the new incentive, Vermonters whose household makes $92,000 a year or less are eligible for $2,500 off a new all-electric vehicle or $1,500 off a plug-in hybrid. And households that are eligible for weatherization assistance can get up to $5,000 off an electric vehicle. (The vehicles have to cost less than $40,000.)
Rebecca Kelley, spokesperson for the Scott administration, said Sunday that the governor’s office was still looking for more information about the use of incentives but that the intent was “to help more Vermonters transition from a traditional fuel to an electric vehicle.”
“If the incentives aren’t being used to reach that goal, we’ll look at changes to the program that better ensure the intent is being carried out,” she added.
Rep. Curt McCormack, D-Burlington, who chairs the House Transportation Committee, concurred that the incentives were meant to lower the upfront cost of an electric car for drivers looking to switch from fossil fuel vehicles.
“Now does that mean every single person will fit into that category?” he said in an interview last week. “That would be nice, that’s the goal…but that’s never going to be the case. There’s always some people who will get in on the program who were going to buy an EV anyway.”
McCormack said lawmakers and the governor decided on the $40,000 price cap as a way to ensure people were not using the incentive to buy “luxury” vehicles.
Dave Roberts, coordinator of Drive Electric Vermont, said that the hope with the new incentives was that dealers would be marketing electric vehicles. He added that he was aware of Freedom Nissan’s marketing practices and said they were operating “within the guidelines for the program.” Roberts added that there is a limit of one state EV incentive per household.
“There’s nothing wrong with what they’re doing,” he said. “In a sense, it’s a good thing because we’re trying to get more used (electric vehicles) on the road.”
As electric vehicle technology rapidly advances, people are generally more interested in leasing than buying e-vehicles, said Roberts. Almost all of the state incentives used by Freedom Nissan customers — 16 out of 17 — have been used by customers leasing vehicles.
Customers cycling through leases helps build the used EV market, making electric vehicles “more affordable,” said Roberts. While Vermonters overall buy twice as many used vehicles as new ones, used e-vehicles currently only make up 15% of the electric vehicle market, he added. Also, automakers are more likely to provide Vermont dealers with electric cars to sell if state incentives are available, Roberts said.
But there’s no way to ensure that a leased electric vehicle stays in-state if the lessee or dealer does not buy it when the lease is up.
“That is a concern and there’s unfortunately not a lot that the state can do at this point to ensure that happens,” said Roberts. He added that Drive Electric Vermont has been talking with Vermont auto dealers about buying electric vehicles back at out-of-state auctions.
Burlington Hyundai customers have used five incentives as of earlier last week, the second highest after Freedom Nissan. Brad Camp, sales manager for the dealer, said the dealership has recently seen a lot of interest in leasing electric vehicles. He added that the electric vehicles are “incredibly affordable” with the combination of incentives.
“People are kind of going, ‘well, I think I’m going to lease it for three years and then see where the technology’s at … and decide whether I’m going to buy my lease or just get into” a new vehicle, he said.
Camp said Hyundai has not been calling customers with EV leases to see if they’re interested in using the state incentive for an upgrade. Hyundai does not have that many electric vehicle customers as those models are relatively new, he added.
“In the case of our customers…if they just bought a car six months ago I’m not going to call them and say ‘hey, come buy another one and get another three grand off,’” Camp said. “It’s just going to upset the customer.”
