Maine will provide $5.1 million in subsidies to encourage residents and companies to buy electric vehicles. The state also will add at least 50 public vehicle charging stations as part of the initiative.

Gov. Janet Mills announced the financial incentives Thursday. Funding comes from a 2017 award Maine received as part of a multi-state settlement with Volkswagen to resolve environmental damage caused by the carmaker’s cheating on U.S. emissions tests.

“Maine people shell out $5 billion a year to out-of-state fossil fuel companies, and a lot of that money is spent on gas for vehicles that just becomes carbon dioxide pumped into our atmosphere,” Mills said in a statement. “We can do better. It is time to usher in the next generation of technologies that will move our state towards a renewable future.”

Transportation is responsible for more than half of the state’s carbon emissions, according to the Maine Department of Environmental Protection.

About half the $5.1 million will be spent to help buy electric vehicles for state and local governments and nonprofit social service agencies. The remainder will provide rebates to Maine residents and businesses that buy or lease electric vehicles.

Efficiency Maine Trust will manage the program, but does not yet have a detailed plan on how it will award the funding. The agency intends to solicit feedback from residents, businesses and organization, and review other incentive models before releasing a plan, Executive Director Michael Stoddard said. He didn’t have a date for when funding will be available.

“I am optimistic we will get something going soon, but I’m not prepared to make a determination now,” he said.

Funds to help government agencies and nonprofits serving the elderly, poor and people with special needs will be managed through a state application or grant program, Stoddard said. The state estimates it can add up to 100 new electric vehicles with the money.

Consumer rebates would apply directly to individual sales. Efficiency Maine has not set a rebate amount, but it expects the incentive might help buy 900 new electric vehicles, more than doubling the current number on the road in Maine and working out to a rebate of around $2,800 per vehicle.

“I’m guessing, based on the current rate of EV purchases, that we are looking at something like two to three years of activity,” Stoddard said. “But it is pretty hard to say for sure. The manufacturers are bringing so many more models of cars on the market and the prices keep coming down. I don’t know if there will be linear demand or it will start to ramp up.”

SPARKING DEMAND

Auto manufacturers have at least 30 models of electric vehicles for sale. They range in price from around $30,000 for a Nissan Leaf or $36,000 for a Chevrolet Bolt to upwards of $86,000 for a Tesla S. About 410 battery-electric cars are registered in Maine, roughly 0.03 percent of the 1.3 million vehicles registered in the state.

Electric vehicle proponents think subsidies will make a small but measurable impact on the number of battery-powered cars on the road.

“I think even a modest fund like this one can have a really significant impact jump-starting the market over the next couple years,” said Dylan Voorhees, climate and clean energy project director at the Natural Resources Council of Maine. “We see that direct incentives for vehicle purchases is one of the most effective ways to increase EV markets in states.”

Separately, the Natural Resources Council and other environmental groups are backing a bill in the Legislature that would provide $500,000 in rebates for electric vehicle purchases.

Mills’ proposed incentive program is a good temporary measure to improve electric vehicle sales in the state, said Barry Woods, director of electric vehicle innovation at ReVision Energy, a solar panel installer in Portland.

“I don’t think it is a long-term plan, but it is a critical move to level the playing field and increase the visibility of the technology,” Woods said.

Efficiency Maine will expand the state’s charging stations at the same time the rebates become available. The state intends to add at least 50 stations at apartment buildings, public buildings and businesses to supplement a network of seven high-speed charging stations. Most U.S. states have some form of electric vehicle rebate or tax credit. The federal government provides a $7,500 tax credit for most electric vehicle purchases, although President Trump seeks to eliminate the program in his most recent proposed budget.

IN NEW ENGLAND’S FOOTSTEPS

Maine and New Hampshire are the only two New England states without a state-sponsored financial incentive to buy electric vehicles. In Massachusetts, the state has provided $28.7 million in rebates for more than 13,800 vehicles in the last five years through its MOR-EV program.

Even though the number of battery-electric vehicle models has grown by 15 times in the past eight years, people still need financial incentives to try out the new technology before it becomes mainstream, said Ben Prochazka, vice president of Electrification Coalition, a nonprofit advocacy group that works with the electric vehicle industry.

“There is no single greater thing a state could do that would influence and accelerate the adoption of electric vehicles than to create early stage incentives like tax credits and rebates,” Prochazka said.

The electric vehicle market in Maine will grow slowly, said Adam Lee, chairman of the board of Lee Auto Malls, which has seven car dealerships in southern Maine.

With relatively cheap gas prices, people still want to buy big pickup trucks and SUVs, even if there are more fuel-efficient cars available, Lee said. His dealerships carry about five electric models, but they make up less than 1 percent of the company’s sales and leases, he said.

But as the state gives out rebates and adds more charging stations, Lee believes more people will consider electric for their new car.

“I think that is going to help. The easier it is to charge your car, the more interest there will be in buying one,” he said.

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