Relax, the Government Isn't Taking Away Your EV Tax Credit

Steph Willems
by Steph Willems

Depending on who you talked to, the looming removal of the $7,500 federal tax credit for electric vehicles was either no big deal, or akin to the firebombing of Mother Earth. Much disagreement existed even among the ranks of environmentalists and EV proponents.

Well, worry no more, EV fans. You too, automakers.

The GOP’s revised tax bill, released late Friday, does not do away with the EV tax credit. The public will continue footing part of the bill for every Tesla Model 3, Chevrolet Bolt, etc, for the foreseeable future. At least until an automaker reaches its 200,000-vehicle cap.

In the wrestling match that ensued over the proposed elimination, it looks like the Senate pinned the House.

It was House Republicans who initially proposed cancelling the credit as part of a broad range of tax reforms. Nuh uh, said the Senate in its own tax reform bill. Like many EV proponents, as well as a coalition of automakers, senators felt the elimination of the EV tax credit would cut a fledgling technology off at the knees.

With electric vehicles still not in the mainstream, losing the incentive could have crippled sales of EVs and negatively impacted the automakers — domestic and foreign — currently building (or planning to build) EVs in the United States. Limited range, a lack of fleshed-out charging infrastructure, and a higher sticker price remain chief concerns for buyers. Prices are falling as battery technology advances, but it’s a slow ramp-up.

Under a law passed by President Obama, EV buyers are eligible for a $7,500 federal tax credit (in addition to state or local incentives) until that particular automaker builds 200,000 of them. New buyers can receive the credit for three months after the automaker reaches the cap, after which the credit is halved, then halved again, then eliminated. Tesla and Nissan, having sold the highest number of EVs in the U.S., are furthest down the road to elimination.

Sales of battery electric vehicles rose 24.3 percent in November, pushing the segment’s take rate to 0.61 percent of the market. Over the calendar year, the EV take rate is 0.58 percent. Small potatoes in the grand scheme of things, but higher than 2016’s 0.45-percent take rate.

Sales of plug-in hybrids, which are not eligible for the full tax credit, rose 2.5 percent in November. The take rate last month was identical to that of EVs. Put together, the amount of vehicles sold with a charging plug in November stands at 1.22 percent of the U.S. market.

[Source: Reuters] [Image: General Motors]

Steph Willems
Steph Willems

More by Steph Willems

Join the conversation
7 of 49 comments
  • Tnk479 Tnk479 on Dec 17, 2017

    The tax rebate is wrong for a variety of reasons but I find it especially appalling that they failed to cap the price of the vehicles eligible for it. Can Democrats and Republicans at least agree to the following: 1. The only way to get any real environmental benefit from EV's is to sell mainstream models that sell by the millions. It makes scarcely little environmental impact to subsidize 80-140k+ cars as the market for those cars is a tiny percentage of the overall market. 2. The wealthy don't need a 7500$ rebate on their taxes and it may not factor into their decision to buy a trendy electric car. People that can afford to spend 80-140k on a vehicle will probably buy it regardless of the 7500$ tax rebate. At the margins there might be a few stretch buyers depending upon the rebate, but, again, what does a few marginal buyers in a 16 million annual auto market have to do with the environment? At a minimum, we should all be able to agree that any tax rebate should be available for cars that cost less than 50k.

    • See 3 previous
    • Npaladin2000 Npaladin2000 on Dec 18, 2017

      @tnk479 The wealthy earned their prolifigate wealth (well, some of them did anyway). They have the right to spend it as they choose, just as us poor schlubs have the right to spend our money as we choose. You can incentive them the same way you can incentivie us unwashed masses: greed. Why? Because it works. You want to just kind of force them at gunpoint to do what you want instead? That would be the dictatorship of the proletariat. That generally doesn't work out well for the proletariat.

  • Warrant242 Warrant242 on Dec 18, 2017

    So much for moderation.

  • Analoggrotto Colorado baby!
  • Rob Woytuck Weight is also a factor for ferries which for instance in British Columbia, Canada are part of the highway system.
  • Ajla I guess some people were big fans of Milli Vanilli and Real Dolls (don't Google that at work) but I have a very large problem with the fake engine sounds and fake transmissions. If you turn them off does it stay off forever or does it turn back on whenever you go into sport mode?
  • Probert That X frame was a killer. No nostalgia for these things to be honest. Yup - life of the party....
  • Kjhkjlhkjhkljh kljhjkhjklhkjh starting to see the concern about how many pro Hyundai blurbs and bits are popping up on the site. It is a very detailed review and well written ...