Bipartisan Bill Hopes to Triple Number of EV Tax Credits

Matt Posky
by Matt Posky

With many concerned that the public’s modest adoption of electric vehicles could backslide without a federal tax incentive, U.S. lawmakers introduced legislation on Wednesday to expand the EV tax credit by 400,000 vehicles per manufacturer.

This would help companies that have already exhausted their quota, like Tesla and General Motors, but even automakers that are nowhere near their current allowance would have something to gain — a wider window in which to sell alternative-energy vehicles with governmental help.

Called the “Driving America Forward Act,” the legislation would grant automakers a $7,000 tax credit for an additional 400,000 vehicles and shorten the depletion/phase-out schedule to nine months. However, the existing deal of 200,000 vehicles per automaker eligible for $7,500 tax credit would also remain intact, resulting in a pretty big allowance for government incentives.

Sponsored by Senators Debbie Stabenow (D-MI), Gary Peters (D-MI), Lamar Alexander (R-TN) and Susan Collins (R-ME), the bill is one of those rare instances of bipartisan legislation. Reuters reports that the plan has already received widespread support from automakers and environmental groups. Still, there are those who believe the incentives are doing more harm than good — artificially propping up a section of the industry that cannot yet stand on its own.

The White House has already suggested eliminating the current EV tax credit system, saving the federal government a claimed $2 billion. Meanwhile, Senator John Barrasso, a Republican sitting at the head of the Environment and Public Works Committee, proposed legislation to end the credit and impose a highway user fee on EVs to help pay for road repairs last February.

Estimates place the cost of “Driving America Forward” at a whopping $11.4 billion.

From Reuters:

GM and Tesla shares rose on Reuters report that the bill would be introduced. Tesla shares recently traded up nearly 1 percent, while GM was up 0.2 percent.

Supporters hope to attach the proposal to tax legislation that could be considered in the next few months.

The existing $7,500 EV tax credit, which allows taxpayers to deduct part of the cost of buying an electric car, phases out over 15 months once an automaker hits 200,000 cumulative EV sales. GM saw its tax credit cut to $3,750 on April 1. Tesla’s tax credit fell to $3,750 on Jan. 1 and will end entirely at year’s end.

Both GM and Tesla have been lobbying Congress for more than a year to extend or evolve the EV tax credit system. The bill received support from both — in addition to Toyota Motor Corp, Ford Motor Co, BMW Group, Volkswagen Group, Fiat Chrysler Automobiles, Honda Motor Co, Nissan Motor Co, and various utilities.

“We have a cap that’s got to go up,” Stabenow told automakers last week. “I want to get this done as soon as possible.”

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Carlson Fan Carlson Fan on Apr 11, 2019

    This is good news. Hopefully it will help flood the market in a few years with used lease return EV's worth little to nothing. I'll take something from Cadillac!......LOL

  • HotPotato HotPotato on Apr 13, 2019

    If you put your head up your arse, don't be complaining about the smell. Being pro-EV isn't the environmentalist position anymore. The consensus on climate science has formed* and it's a given at this point that the transition to EVs needs to happen. Being pro-EV is now seen as being pro-car, and the environmentalist position now is anti-car. In other words, if you like cars, get your head out of your arse and stop attacking EVs. Because the alternative isn't Hellcats forever. It's a bus pass.

    • HotPotato HotPotato on Apr 13, 2019

      *I'm aware that your favorite red-faced YouTube/talk-radio/cable-TV shouter doesn't agree with the scientific consensus on climate change, a spherical earth, the effect of vaccines, and so on. Fools will always be with us.

  • ToolGuy North America is already the greatest country on the planet, and I have learned to be careful about what I wish for in terms of making changes. I mean, if Greenland wants to buy JDM vehicles, isn't that for the Danes to decide?
  • ToolGuy Once again my home did not catch on fire and my fire extinguisher(s) stayed in the closet, unused. I guess I threw my money away on fire extinguishers.(And by fire extinguishers I mean nuclear missiles.)
  • Carson D The UAW has succeeded in organizing a US VW plant before. There's a reason they don't teach history in the schools any longer. People wouldn't make the same mistakes.
  • B-BodyBuick84 Mitsubishi Pajero Sport of course, a 7 seater, 2.4 turbo-diesel I4 BOF SUV with Super-Select 4WD, centre and rear locking diffs standard of course.
  • Corey Lewis Think how dated this 80s design was by 1995!
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