While visiting California this month I learned that it is possible and practical to get a free brand-new car. Start by having an above-average income, a good credit rating, and a house that consumes at least $300/month of electricity (California is among the most expensive states in the U.S. for electricity so the last requirement is not challenging to meet). “We got a Fiat 500E for $129/month,” said a software engineer, “and having an electric car in the household enabled us to get a different rate plan from PG&E that saved us more than $100 per month. The lease rates are low because the leasing company is entitled to all of the tax credits.”
Can it work for apartment-dwellers? A software engineer at one of Silicon Valley’s most profitable companies earns many times the median California household income of $61,000 per year (Census), but still not enough to purchase a house. He pays $70/month to lease a Chevy Spark and can charge it at work. (He likes the car, but says that it might not be practical in the Northeast due to the fact that using the heater eats into the 80-mile advertised range.)
Both electric car owners report negligible additional costs, e.g., for maintenance or energy.
What do readers think? Is this the future for upper-middle-class Americans? Free electric cars funded by taxpayers and lower income customers of the same electric utility?
[And what if you can’t afford a house or an apartment? In one conversation I learned about two ways for Californians to get free or nearly-free housing. Son #1 of the person to whom I was speaking was a software engineer making a well-above-median income. He was living with, but not married to, an artistically-inclined girlfriend who earned a modest amount. She therefore qualified to purchase a $3 million apartment in a brand-new building in San Francisco… for $270,000. She can’t live there for a day and turn around to sell it for $3 million, but her income could rise to $1 billion per year and she wouldn’t have to move out. She could move to Los Angeles and keep the place as a personal vacation destination (the monthly maintenance fee is comparable to the cost of one night in a local hotel). None of this would be available if the happy couple had gotten married prior to the purchase. Young folks: Keep this in mind if you’re partnered with someone and there is a big income disparity; you’re saying goodbye to a lot of valuable government handouts if you marry. Son #2 also worked in the tech industry and was frugal so he’d saved up enough to purchase a house without a mortgage. The house cost about five years of after-tax income. He was married for one year to a person with an Ivy League education in a field with a BLS median pay of roughly $70,000 per year. After a California divorce, his former-partner-for-one-year is now the owner of this house and thus well-positioned for the free electric car deal (above).]
- Morgan Stanley Global Wealth Management adviser writes about the economics in the Boston area (might be better now because he doesn’t mention the $2,500 in taxpayer cash available from the state)