The Federal tax credit for purchasing an electric vehicle is good for up to $7,500 off your next tax bill, under current provisions. But it won’t last forever: each manufacturer can sell 200,000 EVs and plug-ins with the federal rebate, but after that, consumers must pay full price (less any state incentives). And though GM will produce only 10k Volts in 2011, and only 45k units in 2012, its Vice Chairman Tom Stephens is already agitating for the 200k unit limit to be lifted. Optimistic much?
Stephens argument to the Detroit News: subsidies for the first 200k units will only nurse electric vehicles forward through the first generation of products. The implication, of course, is that EVs and plug-ins are not going to be economically viable even by the second generation of products, and will need ongoing support. So much for the promise that EV and plug-in subsidies were a “bridge” to a viable next-generation of eco-mobiles. Meanwhile, by the time GM, Nissan, Ford, and every other EV-hawking OEM hits the magic 200k volume mark, American taxpayers will have spent around $1.5b per manufacturer on these subsidies. With, apparently, little to nothing to show for it in terms of making the second generation of plug-ins more palatable to consumers.
But the push to pile on EV subsidies doesn’t end with a proposed lifting of per-manufacturer caps. Rep Debbie Stabenow (D-MI) tells the DetN that
she wants to “front-load” the $7,500 tax credit for purchasers of electric vehicles — so like “Cash for Clunkers” consumers could get the money deducted from the price of a new vehicle at the dealership.
Currently, owners must file for the rebate when they file their tax returns. Some wealthy owners of electric vehicles won’t qualify for the rebate, advocates say, because of the alternative minimum tax.
Because someone has to think of the wealthy. After all, even with existing tax credits, they’re the only demographic capable of blithely spending upwards of $30k for a car that makes an eco-friendly statement far better than it recoups its price premium in fuel savings. Stabenow also supports jacking up the tax credit to $10k per vehicle, as part of the Roadmap to Electrification, an incentives and infrastructure bill that could cost taxpayers about $124b.
Sooner or later, however, EVs will have to stand on their own and compete against other drivetrains on a level playing field. Loading up more incentives now, and guaranteeing them further into the future won’t stimulate innovation, it will stifle competition. Besides, no manufacturer is even close to selling 200k plug-ins, so calls for a tax credit extension are hugely premature. Let’s let the current generation roll out with the current incentive, and let the market work for a few years before making government policy. Once we know how the market respond to EVs under the current circumstances, the government will better understand their value and can formulate more sensible, effective regulation from there.