Electric vehicle rebates driving people to go green in Minnesota

[MUSIC PLAYING] CATHY WURZER: Minnesota's new electric vehicle rebate went live this morning. New car owners can apply for up to $2,500 in a rebate for a new car and $600 for a used car. In total, the state set aside $15 million for the rebates. The State Department of Commerce started accepting applications at 10 o'clock this morning, and more than a third of the money, and counting, has already been reserved.

The rebate program was part of a suite of bills that the state legislature passed last session to address climate change. Right now, EVs make up less than 1% of vehicles on the road in Minnesota, and state lawmakers want to increase that percentage. Joining us right now is JUKKA Kukkonen, founder of electric vehicle, market and business consulting company, shift to electric, and a Graduate Professor at the University of St. Thomas. Professor, welcome to the program.

JUKKA KUKKONEN: Well, thank you very much. Good to speak with you.

CATHY WURZER: Thank you so much for taking the time to speak with us. This state and federal rebates are supposed to make it easier to buy an electric vehicle, how does it buy down the cost of a car?

JUKKA KUKKONEN: Well, it does provide a good incentive for people to look at the EVs. And I'm not sure how many people buy a new car, because they get 2,500 tax credit, or use one for $600. But I think this increases the discussion about the topic, and hopefully makes more people to go and test drive the cars, because that's where the difference is made.

CATHY WURZER: So get out there and literally kick some tires. So we really don't know our incentives, any research done about incentives, enough to get people out of their gas powered cars and into an EV. Any numbers out there at all?

JUKKA KUKKONEN: Yeah, clearly they have an impact, they definitely do. It is definitely driving people to test drive their cars and check it out. And we've seen increasing sales in those states where the incentives are available.

CATHY WURZER: There was a 2021 study of EV rebates in California, and it found some equity issues with rebates, the rebates are predominantly given to high income electric vehicle buyers. Any issues with that in other states that you're seeing?

JUKKA KUKKONEN: I think there's oftentimes good limitations in these, and I think good thing about the Minnesota one is that it also provides a rebate for used EVs. And then you can find EVs that are less than $10,000 of price and get a rebate for those.

CATHY WURZER: What's the biggest obstacle that EV owners face to applying for these rebates?

JUKKA KUKKONEN: I think these are pretty straight forward now when they are available. It took a long time to get them running, because they had to set up the program itself. The federal incentives are a bit more complicated, because they are based on a maker model, we don't have that issue with the Minnesota one.

CATHY WURZER: Electric cars are expensive, as you know, professor, and rebates are going to make them a little less expensive, but what does it take, what will it take for the price of EVs to go down so much that it become affordable and push more people into that realm versus a gas-powered vehicle?

JUKKA KUKKONEN: Right now, actually, it's an excellent time to buy a new EV. EV prices dropped, I think, 18% last year, so they have become much more affordable. And, overall, new vehicle prices have gone up. There aren't many very affordable new vehicles. But the good news, of course, is that more new vehicles and new EVs are sold, more we will have used EVs available in the market in coming years.

CATHY WURZER: Mm, so do you think it's important to continue offering these rebates?

JUKKA KUKKONEN: Yeah, these definitely are good incentives to be had there. So people have something to push them towards that. And we have over 80 new EVs in the market right now. So there's more and more availability of vehicles and good information for us. Over 90% of them are available at four-wheel drive, which fits very well for our Minnesota drivers.

CATHY WURZER: What other resources are available for folks interested in buying EVs who might not just exactly where to go, what to do, what questions to ask?

JUKKA KUKKONEN: I think that the Department of Energy and Department of Transportation in Minnesota have some good resources. We have evinfolist.com website where people can download information about all the EVs that are available in Minnesota and in the US, so that's a good one. And also talk with all the EV owners that you know, because they are the best resource always.

CATHY WURZER: Excellent. Professor, thanks for your time today, we appreciate it.

JUKKA KUKKONEN: All right, thank you very much.

CATHY WURZER: JUKKA Kukkonen is the founder of shift to electric, and a graduate professor at the University of St. Thomas. We're going to turn to the other side of the EV discussion right now. What's happening at dealerships. Pavel Ihnatovich is the owner of GS Motors and Hopkins, that's a dealership that sells used electric vehicles. Pavel, welcome to the program.

PAVEL IHNATOVICH: Hello and thank you.

CATHY WURZER: Absolutely. So what are you seeing. I know that this rebate just went online today. Are you anticipating a surge in some interest because of the rebate?

PAVEL IHNATOVICH: You know, overall, it's been much busier than normal during this time of the year, thanks to the rebate, because it's also combined with an IRS federal rebate. And the thing is this rebate people know about it since last year. And a lot of people that bought cars last year, EVs, they will apply for it right now. So there is a lot of talking. I see a lot more traffic right now in the showroom. And I'd say almost everyone is talking about it, asking about it, how does it work, can they get it. So yeah, it's getting busy.

CATHY WURZER: Yeah OK, good. As I mentioned, that electric cars are still pretty expensive for most people. How much do the rebates take off the top in terms of the price for these cars?

PAVEL IHNATOVICH: Well, to be honest, prices on the used EVs came down quite a bit, I'd say on some models, between 20 to 40% since the COVID years when we had the shortage of inventory, that's when we were selling cars over MSRP. So now they're way more affordable, there is a lot of models that fall within that under $25,000 threshold that would qualify for the rebate. And rebate helps, yes, yeah, because it's the $600, the Minnesota, plus up to $4,000 credit from the IRS. Altogether, that's a big help for the buyer, for any type of buyer.

CATHY WURZER: Interesting that you're getting more used cars in, why do you think that is?

PAVEL IHNATOVICH: Well, there was a shortage for a while. Now the inventory levels are going back to normal. And I'd say we're still getting just back to normal levels, pre-COVID levels for the amount of cars on the lot and stuff. So it's still a bit of a recovery. So there's more of these returns, there's more trades, so that's how we get more cars, yeah finally.

CATHY WURZER: You probably heard the professor talk a little bit about how he feels that the rebates get people in the door to kick some tires, and maybe do some talking to a sales person, not necessarily buying a car, what's your experience?

PAVEL IHNATOVICH: Well actually, on my end, on the used end, I'd say an average buyer, it takes a couple of weeks, or even a month, from initial come and talk and test drive, to actually purchase. So it takes a while, because people need to come up with budget, they need to see how the charging works, do some extra research. So I see more test drives, I see more appointments, and most of them will turn into sales, I'd say in late February, early March. He was right, professor is right, yeah.

CATHY WURZER: Interesting, so folks interested in EVs really do take their time to do the research and do some thinking about it?

PAVEL IHNATOVICH: Yeah, and that's our sales approach here too. So there is no pressure that-- you got to make sure it works for you. So you just buy it and then you know what you're doing. Maybe with new cars it could be a little different story.

Some of the new cars, they have way more features, they have more range and stuff. And it's a different type of buyer, that can afford 40-plus thousand dollar car. So that could that could be a little different. But on the youth side, yeah. It's not all, but I'd say 50, 60% of customers, they take time to think and research.

CATHY WURZER: What's the biggest questions they have for you? What's the biggest, say, concern?

PAVEL IHNATOVICH: Well it's the range. It's the range and the battery life, so two big questions. But right now, there's so much information out there in internet. So people do a lot of research before they even come here. And a lot of them they already know the answers. But I help with that too, yeah. Well, the biggest one in Minnesota is the range, of course. And I always say 50%, cut it in half, you'll never be in trouble.

CATHY WURZER: Well, I appreciate the conversation today. And it sounds like you're going to be a little busy here in the next few weeks.

PAVEL IHNATOVICH: Oh yes, thank you so much.

CATHY WURZER: I appreciate it. Pavel Ihnatovich is the owner of GS Motors, based in Hopkins. By the way, for more information about that EV rebate on the state level, you can find it at mn.gov/evrebates.