California Incentives and Laws for HEVs / PHEVs

The list below contains summaries of all California incentives and laws related to HEVs / PHEVs.

State Incentives

Alternative Fuel and Vehicle Research and Development Incentives

The Alternative and Renewable Fuel and Vehicle Technology Program, established by Assembly Bill 118 and administered by the California Energy Commission, aims to increase the use of alternative and renewable fuels and innovative technologies. Grants and loans are available for projects that:

• develop and improve alternative and renewable low-carbon fuels;
• optimize alternative and renewable fuels for existing and developing engine technologies;
• produce alternative and renewable low-carbon fuels in California;
• decrease the overall impact of an alternative and renewable fuel's life-cycle carbon footprint and increase sustainability;
• expand fuel infrastructure, fueling stations, and equipment;
• improve light-, medium-, and heavy-duty vehicle technologies;
• retrofit medium- and heavy-duty on-road and non-road vehicle fleets;
• expand infrastructure connected with existing fleets, public transit, and transportation corridors; and
• establish workforce training programs, conduct public education and promotion, and create technology centers.

(Reference California Health and Safety Code 44270-44274.7)

High Occupancy Vehicle (HOV) Lane Exemption

Qualified compressed natural gas, hydrogen, electric, and hybrid electric vehicles (HEV) meeting specified California and federal emissions standards may use HOV lanes regardless of the number of occupants in the vehicle. Vehicles must be affixed with a Clean Air Vehicle sticker issued by the California Department of Motor Vehicles, which expire January 1, 2011. A limited number of Clean Air Vehicle stickers are available. Drivers of qualified HEVs registered to an address in the nine-county San Francisco Bay region must also obtain a Bay Area FasTrak account before using HOV lanes. For more information about qualified vehicles, see the California Air Resources Board Carpool Lane Use Stickers Web site. (Reference California Vehicle Code 5205.5 and 21655.9)

Employer Invested Emission Reduction Funding - South Coast

The South Coast Air Quality Management District (SCAQMD) administers the Air Quality Investment Program (AQIP). The AQIP provides funding to allow employers within SCAQMD's jurisdiction to make annual investments into an administered fund to meet employers' emission reduction targets. The revenues collected are used to fund alternative mobile source emission/trip reduction programs, including alternative fuel vehicle projects, on an on-going basis. Programs such as procurement of low-emission, alternative fuel or zero emission vehicles, and old vehicle scrapping may be considered for funding.

Technology Advancement Funding - South Coast

The South Coast Air Quality Management District's Clean Fuels Program provides funding for research, development, demonstration, and deployment projects that are expected to help accelerate the commercialization of advanced low-emission transportation technologies. Eligible projects have included: power trains and energy storage/conversion devices (e.g., fuel cells and batteries); and implementation of clean fuels (e.g. natural gas, propane, and hydrogen), including their infrastructures. Projects are selected via specific requests for proposals on an as-needed basis or through unsolicited proposals. Approximately $10 million in funding is available annually with expected cost-share from other project partners and stakeholders.

Low Emission Vehicle Incentives and Technical Training - San Joaquin Valley

The REMOVE II Program (Program) is administered by the San Joaquin Valley Air Pollution Control District (APCD) and provides incentives for the purchase of low emission passenger vehicles, light-duty trucks, small buses, and trucks with Gross Vehicle Weight Ratings of 14,000 pounds or less. The purpose of the Program is to encourage the early introduction of low emission vehicles in the San Joaquin Valley. The Program offers between $1,000 and $3,000 per vehicle and varies according to the emission certification level and size of the vehicle. Vehicles must be powered by alternative fuel, electric, or hybrid electric engines/motors. The Program also includes an Alternative Fuel Vehicle (AFV) Mechanic Training Component that provides incentives for the education of personnel on the mechanics, operation safety, and maintenance of AFVs, fueling stations, and tools involved in the implementation of alternative fuel technologies.

Alternative Fuel and Advanced Vehicle and Infrastructure Incentives - Vacaville

The City of Vacaville provides incentives for the purchase of new qualified battery electric vehicles, dedicated compressed natural gas (CNG) vehicles, plug-in hybrid electric vehicles, and CNG vehicle home fueling appliances.

Clean Vehicle Parking Incentive - San Jose

The City of San Jose has developed a Clean Air Vehicle Parking Program to reduce vehicle emissions, stimulate activity in the downtown, and increase sales of clean air vehicles at San Jose auto dealerships. For eligible vehicles, the program allows free parking at participating municipal off-street parking facilities, on-street meters, and regional park and recreation parking lots. Vehicles must display the Clean Air Vehicle Parking Permit, which is available for a $30 application fee. Only eligible vehicles purchased in San Jose after January 1, 2000, can obtain a permit. Zero Emission Vehicles purchased outside San Jose are also eligible to apply as long as the vehicle is registered in San Jose.

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Parking Incentive - Santa Monica

The City of Santa Monica offers free meter parking for dedicated electric vehicles displaying the Zero Emission Vehicle decal, and compressed natural gas and HEVs displaying properly affixed California Clean Air Vehicle Decals. Vehicles may park free for the maximum time limit posted on the meter per trip.

Utility/Private Incentives

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (AFV) Insurance Discount

Farmers Insurance provides a discount of up to 10% on all major insurance coverage for HEV and AFV owners. To qualify, the automobile must be: 1) designed to use a dedicated alternative fuel as defined in the Energy Policy Act of 1992; or 2) an HEV. A complete Vehicle Identification Number is required to validate vehicle eligibility.

Clean Vehicle Electricity Rate Reduction - PG&E

Pacific Gas & Electric (PG&E) offers a discounted rate for electricity used to charge battery electric vehicles, plug-in hybrid electric vehicles, and natural gas vehicle home fueling appliances.

Low Emission Taxi Incentives - San Francisco

The San Francisco Taxicab Commission has committed to reduce greenhouse gas emissions from the San Francisco taxi fleet by 20% by 2012, as compared to 1990 emissions levels. Under the Clean Taxi Program, companies may apply for a surcharge of up to $7.50 on any gate fee charged for the use of certain low emission vehicles. Additionally, grants of up to $2,000 per vehicle may be available from the San Francisco County Transportation Authority toward the purchase of light-duty hybrid electric and compressed natural gas taxis.

Employee Vehicle Purchase Incentives - Riverside

City of Riverside employees are eligible to receive a rebate toward the purchase of qualified natural gas or hybrid electric Advanced Technology Partial Zero Emission Vehicles that are purchased from a City of Riverside automobile dealership. The rebate for a new qualified vehicle is worth up to $2,000, or $1,000 for a qualified used vehicle.

Laws and Regulations

Electric Vehicle (EV) Infrastructure Evaluation

The California Public Utilities Commission (Commission), in consultation with the California Energy Commission, California Air Resources Board, electrical corporations, and the motor vehicle industry, must evaluate policies in an effort to develop infrastructure sufficient to overcome any barriers to the widespread deployment and use of EVs and plug-in hybrid electric vehicles (PHEVs). By July 1, 2011, the Commission is required to adopt rules to address the following:

• The impacts on electrical infrastructure and any infrastructure upgrades necessary for widespread use of EVs and PHEVs, including the role and development of public charging infrastructure;
• The impact of EVs and PHEVs on grid stability and the integration of renewable energy resources;
• The technological advances necessary to ensure the widespread use of EVs and PHEVs and what role the state should take to support the development of this technology;
• The existing code and permit requirements that will impact the widespread use of EVs and PHEVs and any recommended changes to existing policies that may be a barrier to the widespread use of EVs and PHEVs;
• expand fuel infrastructure, fueling stations, and equipment;
• The role the state should take to ensure that technologies employed in EVs and PHEVs work harmoniously and across service territories; and
• The impact of widespread use of EVs and PHEVs on achieving the state's greenhouse gas emissions reductions goals and renewables portfolio standard program, and what steps should be taken to address the possibility of shifting emissions reductions responsibilities from the transportation sector to the electrical industry.

(Reference Senate Bill 626, 2009, and California Public Utilities Code 740.2)

State Transportation Plan

The California Department of Transportation (Caltrans) is required to update the California Transportation Plan (Plan) by December 31, 2015, and every five years thereafter. The Plan must address how the state will achieve maximum feasible emissions reductions, taking into consideration the use of alternative fuels, new vehicle technology, and tailpipe emissions reductions. Caltrans must prepare and submit an interim report to the California Transportation Commission and to the Chairs of the Senate and Assembly committees related to transportation, environmental quality, natural resources, and local government by December 31, 2012. Caltrans must consult and coordinate with related state agencies, air quality management districts, public transit operators, and regional transportation planning agencies. Caltrans must also provide an opportunity for input by the general public. A final draft of the Plan must be submitted to the Legislature and Governor. (Reference Senate Bill 391, 2009, and California Government Code 65071-65073)

Electric Vehicle (EV) Charging Requirements

New EVs and plug-in hybrid electric vehicles (PHEVs) must be equipped with a conductive charger inlet port that meets the specifications contained in Society of Automotive Engineers (SAE) standard J1772. EVs and PHEVs must be equipped with an on-board charger with a minimum output of 3.3 kilovolt amps. These requirements do not apply to EVs and PHEVs that are only capable of Level 1 charging, a charging method that allows a vehicle to be charged by having its charger connected to the most common grounded receptacle. (Reference California Code of Regulations Title 13, Section 1962.2)

Low Emission Vehicle (LEV) Standards

California's LEV II exhaust emission standards apply to Model Year 2004 and subsequent model year passenger cars, light-duty trucks, and medium-duty passenger vehicles meeting specified exhaust standards. The LEV II standards represent the maximum exhaust emissions for LEVs, Ultra Low Emission Vehicles, and Super Ultra Low Emission Vehicles, including flexible fuel, bi-fuel, and dual fuel vehicles when operating on an alternative fuel. New Model Year 2009 and subsequent model year passenger cars, light-duty trucks, and medium-duty passenger vehicles must meet specified fleet average greenhouse gas (GHG) exhaust emissions requirements. Each manufacturer must comply with these fleet average GHG requirements, which are based on a calculation established by the California Air Resources Board. An alternative compliance method exists for bi-fuel, flexible fuel, dual-fuel, and grid-connected hybrid electric vehicles. A manufacturer that achieves a fleet average GHG value that is lower than the fleet average GHG requirement applicable to the 2012 Model Year may receive credits for each model year. (Reference California Code of Regulations Title 13, Section 1961-1961.1)

Zero Emission Vehicle (ZEV) Production Requirements

New passenger cars, light-duty trucks, and medium-duty passenger vehicles are certified as ZEVs if the vehicles produce zero exhaust emissions of any criteria pollutant (or precursor pollutant) under any and all possible operational modes and conditions. Manufacturers must produce and deliver for sale in California a minimum percentage of ZEVs for each model year as follows:

Model Year	Minimum ZEV Requirement
2010-2011	11%
2012-2014	12%
2015-2017	14%
2018 and on	16%

Manufacturers may comply with the ZEV requirements through multiple alternative compliance options that include the production of low-emission vehicles.

(Reference California Code of Regulations Title 13, Section 1962.1)

Alternative Fuel Vehicle Retrofit Regulations

Converting emission-controlled vehicles with retrofit systems to operate on an alternative fuel in lieu of the original gasoline or diesel fuel is prohibited unless the retrofit systems have been evaluated and certified by the California Air Resources Board (ARB). The certification of an alternative fuel retrofit system must be obtained by its manufacturer and is issued by ARB once the manufacturer demonstrates compliance with the emission, warranty, and durability requirements. A manufacturer is defined as a person or company who manufactures or assembles an alternative fuel retrofit system for sale in California; this definition does not include individuals wishing to convert vehicles for personal use. Individuals interested in converting their vehicles to operate on an alternative fuel must ensure that the alternative fuel retrofit systems used for their vehicles have been certified by ARB. For more information, see the ARB Alternative Fuel Retrofit System Web site. (Reference California Code of Regulations Title 13, Section 2030-2031, and California Vehicle Code 27156)

Fleet Vehicle Procurement Requirements

When awarding a vehicle procurement contract, every city, county, and special district, including school and community college districts, is authorized to require that 75% of the passenger cars and/or light-duty trucks acquired be energy-efficient vehicles. By definition, this includes hybrid electric vehicles or alternative fuel vehicles that meet California's advanced technology partial zero emission vehicle (AT PZEV) standards. Vehicle procurement contracts are also authorized to evaluate fuel economy and life-cycle factors. (Reference California Public Resources Code 25725-25726)

Vehicle Acquisition and Petroleum Reduction Requirements

The California Department of General Services (DGS) is responsible for maintaining specifications and standards for passenger cars and light-duty trucks that are purchased or leased for use by state offices, agencies, and departments. These specifications include minimum vehicle emission standards and encourage the purchase or lease of fuel-efficient and alternatively fueled vehicles. On an annual basis, the DGS must compile information including, but not limited to, the number of alternative fuel and hybrid electric vehicles acquired, the locations of the alternative fuel pumps available for those vehicles, and the total amount of alternative fuels used.

Vehicles owned or leased by the state that are capable of operating on alternative fuel must operate on that fuel unless the alternative fuel is not available. Additionally, the Secretary of State and Consumer Services, in consultation with the DGS and other appropriate state agencies, must develop, implement, and submit to the Legislature and the Governor, a plan to increase the state fleet's use of alternative fuels, synthetic lubricants, and fuel-efficient vehicles. This must be done by reducing or displacing the fleet's consumption of petroleum products by 10% by January 1, 2012, and 20% by January 1, 2020, as compared to the 2003 consumption level. The DGS must also take steps to transfer vehicles between agencies and departments to ensure that the most fuel-efficient vehicles are used and to eliminate the least fuel-efficient vehicles from the state's motor vehicle fleet. Beginning April 1, 2010, and annually thereafter, the DGS must provide progress reports to the California Department of Finance, related legislative committees of the Legislature, and the general public via the DGS Web site.

(Reference Executive Order S-14-09, 2009, and California Public Resources Code 25722.5, 25722.6, and 25722.8)

Alternative Fuel and Vehicle Policy Development

The California Energy Commission is required to prepare and provide an Integrated Energy Policy Report (IEPR) to the governor on a biannual basis. The IEPR provides an overview of major energy trends and issues facing the state, including those related to transportation fuels, technologies, and infrastructure. The IEPR also examines potential effects of alternative fuels usage, vehicle efficiency improvements, and shifts in transportation modes on public health and safety, the economy, resources, the environment, and energy security. The primary purpose of the IEPR is to develop energy policies that conserve resources, protect the environment, ensure energy reliability, enhance the state's economy, and protect public health and safety. (Reference California Public Resources Code 25302)

Mobile Source Emissions Reduction Requirements

Through its Mobile Sources Program, the California Air Resources Board (ARB) has developed programs and policies to reduce emissions. A drayage/port truck rule regulates heavy-duty diesel-fueled vehicles that transport cargo to and from California's ports and intermodal rail facilities. The rule requires that drayage trucks be equipped with engines certified to current California or federal emissions standards. A public transit bus rule regulates public transit fleets and sets emission reduction standards for new urban transit buses. The rule allows transit fleets to choose one of two options in order to meet their emissions reduction requirements: using alternative fuels, including zero-emission buses; or clean diesel, including retrofit devices. A solid waste collection vehicle rule regulates solid waste collection vehicles with a Gross Vehicle Weight Rating of 14,000 pounds or more, operate on diesel fuel, have 1960 through 2006 engine models, and collect waste for a fee. The fleet rule for public agencies and utilities requires fleets to install Best Available Control Technology devices on vehicles or purchase vehicles that run on alternative fuels or use advanced technologies to achieve emissions requirements by specified implementation dates. (Reference California Code of Regulations Title 13, 2021-2027)

Alternative Fuel Promotion - San Jose

As part of San Jose's Green Vision (PDF 161 KB), the City of San Jose has committed to several alternative fuel and hybrid electric transportation goals:
1) Increase the use of alternative energy vehicles for airport operations and encourage the use of zero-emission transportation modes to and from the airport.
2) Establish a research center to encourage the development of alternative fuel vehicles for use in mass and private transit.
3) Create local policies to encourage residents and businesses to use zero emission and hybrid electric vehicles.
4) Implement a Green Fleet Policy (PDF 423 KB) to ensure that 100% of public fleet vehicles run on alternative fuels by 2022.