Quick Take:

Santa Cruz County is falling behind in the adoption of electric vehicles compared to other parts of the state. Higher prices are putting many consumers off, local auto dealers say. Lower-income areas of the county in particular are struggling to afford the upfront costs of an electric car despite thousands of dollars in government rebates and fuel savings.

Long ranked among the top California counties for electric cars, Santa Cruz County has recently started to fall behind other parts of the state in electric vehicle registrations.

The county’s experience with slowing electric vehicle adoption illustrates some of the challenges the state faces in its ambitions to curb air pollution and global warming. California plans to have 5.2 million battery-electric cars in use by 2030 and 11.4 million by 2035, up from around 760,000 in 2022.

Last year, California’s counties, on average, overtook Santa Cruz County for the first time in Department of Motor Vehicle registrations of light-duty, battery-electric vehicles, reaching 2.6% of total DMV registrations compared to Santa Cruz’s 2.4%, according to California Energy Commission data.

There were 5,377 battery-electric cars registered countywide in 2022, up from 4,135 in 2021, an increase of 30%. Still, Santa Cruz County fell from No. 8 to No. 12 in the state by battery-electric vehicle registrations as other counties registered the cars at a faster clip.

Sticker shock

Higher prices for electric cars are putting many Santa Cruzans off, local auto dealers say. Nationwide, a new electric vehicle cost $53,376 on average in August versus the average price of $48,451 for all vehicles, according to Kelley Blue Book.

“There are some rebates and discounts later that you might be entitled to,” said Melvin Cooper, owner of Chevrolet of Watsonville. “But out of the wrapper, you have to buy the car and they cost more.”

So far across the state, wealthier neighborhoods are adopting pricier EVs faster than other areas and potentially reaping thousands of dollars in savings over people who can’t afford the higher upfront cost.

That economic divide appears within Santa Cruz County’s ZIP codes, which show electric cars are becoming a status symbol among affluent residents. The 95066 ZIP code, encompassing Scotts Valley and with a median household income of around $131,000, reached a battery-electric vehicle registration rate of nearly 4.3% in 2022.

By comparison, the 95076 ZIP code, which includes Watsonville and has a median income of roughly $81,000, reached 0.96% battery-electric vehicles in 2022.

The figures show “that the rate of adoption seems to be coming out of Silicon Valley and continuing to move outward,” Cooper said.

He said EVs make sense for drivers with short commutes and people who aren’t worried about charging stations, but they aren’t for everybody. “There is a good niche of the community where EVs make a lot of sense and there is also a niche in the community where EVs do not make enough sense,” he said.

The EV distribution by wealth further appears among Santa Cruz’s neighboring counties. Santa Clara, with a household income of around $151,000, reached 5.7% battery-electric vehicles in 2022, compared with Monterey’s EV adoption of 1.3% and income of $93,000. Santa Cruz County has a median household income of around $102,000.

“We have seen much higher adoption in higher-income communities,” said Andreas Wallendahl, co-founder of EV lending startup Tenet. But he said higher upfront costs are steering many less-affluent Californians away from thousands of dollars in yearly savings.

Tenet’s financing data shows battery-electric cars typically have a 33% higher upfront cost before tax in California, but usually make up for it after a few years in maintenance and fuel savings. For example, Wallendahl said a Tesla Model 3 priced at around $40,000 has an average payback period of three years.

“A lot of people can’t make that math work,” he said. “More financial-savvy customers are.”

Federal tax handouts passed last year are offering up to $7,500 to buy an EV largely depending on if the car was manufactured in America. However, funds for a California-only rebate of up to $7,500 have recently been paused and state regulators are restructuring benefits to better help low-income buyers, said Andrew Hoeksema of Santa Cruz-based nonprofit Ecology Action. Hoeksema was hired this year to lead the organization’s EVs for Everyone campaign. Ecology Action offers free advice for people to get federal, state and local aid to upgrade to an EV.

“The complex matrix of incentives from various funding sources is an additional barrier on top of the cost of a new vehicle and on top of the challenge of adopting a new technology,” he said.

Help on the way

However, efforts are underway in Santa Cruz County to make it easier to own an electric car.

So far, the county government is focused on improving charging infrastructure, in part because there is already financial help available from federal and state governments, nonprofits and utilities, said Tatiana Brennan, a senior administrative analyst who is leading a county effort for public chargers. Charging access is among the biggest barriers to EV ownership, especially among renters, who make up around half of Santa Cruz’s residents.

The counties of Santa Cruz and San Benito, cities of Santa Cruz and Watsonville, Ecology Action and the Association of Monterey Bay Area Governments have applied for a federal grant of $15 million to install public EV chargers.

The money would provide an additional 252 charging ports at 63 public sites, which would nearly double the number available. In September, there were 272 public chargers in Santa Cruz County, according to the California Energy Commission.

If the grant is approved in December, the new charging stations should be online by early 2025, Brennan said. She said most chargers would be for lower-income areas, including in Watsonville and the San Lorenzo Valley, which are communities that often drive longer for work.

“This is going to be a game-changer,” she said. “If we get the grant.”

Separately, Ecology Action has won a $3 million grant from the California Energy Commission and a $22 million contract from Pacific Gas & Electric, which will provide 286 chargers for multifamily housing, small businesses and nonprofits in the Monterey Bay area.

Chevrolet of Watsonville owner Cooper said more chargers should make EVs more attractive for South County residents.

“There is more charging infrastructure in Watsonville and we are bringing more infrastructure to the dealerships to support this demand,” he said. “It will continue to evolve and progress where there will be more EV adoption over the years.”

Have something to say? Lookout welcomes letters to the editor, within our policies, from readers. Guidelines here.

FOR THE RECORD: An earlier version of this story contained an incorrect amount for the median household income in Santa Cruz County. It is around $102,000, not $103,000.

Dieter Holger is a journalist reporting on business, policy, technology and the environment. His work appears in The Wall Street Journal, MarketWatch, PCWorld and elsewhere. He holds a master’s degree...