By on December 23, 2019

Prior to Congress taking the rest of the month off to relax and presumably gear up for an impeachment trial, they first had to settle their year-end tax package. Automakers were hoping that would include an extension of electric vehicle tax credits, but it was a doomed proposition.

An extension was initially included in the bipartisan Driving America Forward Act, which manifested this spring, before being incorporated into the Democrat-friendly GREEN Act (Growing Renewable Energy and Efficiency Now). That got it through the House but not the Republican-controlled Senate, which wasn’t interested.

While the current $7,500 EV tax credit remains in place, Tesla and General Motors have both reached their 200,000-vehicle quota. Naturally, they (and other automakers) lobbied for an expansion, one which would have seen a $7,000 credit kept in place until a manufacturer sold 600,000 electric automobiles. Several Republican lawmakers openly shared their distaste for the plan, though few more openly than Senator John Barrasso of Wyoming, who had an opposing bill — called the Fairness for Every Driver Act — interested in reducing subsidies on the grounds that EV credits have already done enough. 

Citing the over $4 billion in federal credits EV shoppers had already received, Barrasso claimed  the system has already encouraged automakers to commit t manufacturing more electric cars, arguing it’s no longer fair to burden taxpayers.

Barrasso said it’s time to refocus on infrastructure (including adding more EV charging stations), allowing states to expand on subsidies if they choose, remaining highly critical of where those federal credits have been going. “Nearly 80 percent of the tax credits go to households earning at least $100,000 a year,” he said. “These car buyers don’t need a taxpayer subsidy.”

President Donald Trump was also alleged to have been against expanding EV credits, according to Senator Debbie Stabenow (D-MI). “There has been extreme resistance from the president,” she told Bloomberg last week. “I don’t know why the White House would want to stop jobs and the future of the auto industry.”

Studies have indicated that widespread electrification may actually hurt jobs, as EVs require less manpower to manufacture (and with the brunt of battery labor typically performed outside of the United States). However, the counterpoint has often been that pushing new tech will help grow high-tech professions. Unfortunately, the White House only agrees with the former positio, warning Congress that taking a stand on EV subsidies could stymie the year-end tax package.

“Frankly, I was surprised that anyone at any automaker thought there was a realistic chance of the 200,000 cap being increased in the current administration,” Navigant analyst Sam Abuelsamid told Automotive News this week.

If you’re wondering how dire the situation is for automakers, it depends on which ones you’re talking about. General Motors and Tesla will probably see interest drop now that the credits are drying up, but the next manufacturers to hit the 200,000-unit mark are likely several years away from having to be truly concerned. By then, EVs could be so good (or affordable?) that it might not matter.

[Image: Welcomia/Shutterstock]

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40 Comments on “Congress Says Nay to Expanding EV Tax Credits...”


  • avatar
    thornmark

    Good. The lobbyists were defeated.

    >>General Motors and Tesla will probably see interest drop now that the credits are drying up<<

    happened everywhere else where tax subsidies expired, so you can rely on it

    • 0 avatar
      28-Cars-Later

      GM yes, Tesla no. If anything it will increase market share as its rivals falter but overall marketshare will either not increase or only increase slightly in 2020.

    • 0 avatar
      SCE to AUX

      Tesla won’t see interest dry up. They can’t build cars fast enough.

      • 0 avatar
        jkross22

        They’re building cars quite quickly. Hopefully they’ll start to do a better job. Most of them have clearly misaligned body panels or things not fitting together correctly.

        • 0 avatar
          FreedMike

          I think that’s getting a lot better. But given that most of the credible Tesla competition suffers from disappointing range (Taycan, E-tron), hasn’t hit the market (Mach-E) or is outright vapor (the now-delayed Benz, Cadillac’s imaginary EV, etc), maybe that isn’t such a big problem, at least in the short term.

          But eventually, the competition will begin to catch up.

  • avatar
    Superdessucke

    Thank you Congress!!! Nice Holiday news :-) Now how about getting rid of it entirely in 2020? No longer necessary and pretty much solely benefits high income households anyway.

  • avatar
    FormerFF

    Now can we do something about ethanol subsidies?

  • avatar
    Zipster

    Interesting that the learned senator from Wyoming would be so oppositional to the subsidies. Wyoming has 1100 windmills outside of Casper and has enough available windpower to become a carbon-free state.

  • avatar
    indi500fan

    IIRC 80 percent or more of the subsidies went to people making > 100 grand per year, if evs are the correct decision, these folks should be smart enough to buy them without the gravy added on.

    • 0 avatar
      FreedMike

      So…tax breaks for folks who are affluent are bad. I’m waiting with baited breath for you to affix a Bernie 2020 sticker to the back of your car!

      • 0 avatar
        Art Vandelay

        “So…tax breaks for folks who are affluent are bad. I’m waiting with baited breath for you to affix a Bernie 2020 sticker to the back of your car!”

        Oh come on man. I could just as easily accuse you of the inverse in this case and asked you where you hang your MAGA hat at night.

        I’m honest…I support the tax breaks that help me to pay less taxes. If I get an EV this go around, that’ll be why…so I get the 7500 for a change.

    • 0 avatar
      dal20402

      I’ll give back my $5000 EV subsidy this year when somebody with >$10M in income pays the same effective rate I do. (IOW, when we stop taxing investment income at half the rate of high earners’ wage income.)

      • 0 avatar
        golden2husky

        dal, well said. I also feel that the present president and Senate are against anything that smacks of green (perceived or actual) even if it hits the more well-to-do. Surprising since the 1% are all they care about but their hatred for anything to do with reducing energy consumption or greenhouse gas has clouded the thought process – if there is one. Oh well, yet another industry the USA can lag in instead of being at the forefront.

        • 0 avatar
          ToddAtlasF1

          The climate hoax only benefits the 1%. Trump’s policies have been benefitting the working class. The Democrats have been in the thrall of Chinese money for more than 25 years, and the Chinese are the ones they’ve positioned to benefit from EVs. They have their own lithium and lithium mines everywhere else they’re significant.

          Stopping oil is all about the fact that the US and Canada are now known to be in possession of the largest oil reserves. If we leave the rest of the world to worry about middle eastern stability, we can solve all of our economic issues through oil production. Abundant energy can even provide us with the sort of massive desalination plants they have in Saudi Arabia, Kuwait and Riyadh. If you want to see the US lead again, get out of the way and stop serving the people who are intent on destroying you.

          • 0 avatar
            golden2husky

            You and your ilk are the ones destroying the future of this country, and this world. The “hoax” as you put it is playing out right in front of your eyes. Your opinion holds almost zero merit in the scientific world. But your hero has engaged a war on science.

            “Abundant energy can even provide us with the sort of massive desalination plants they have in Saudi Arabia, Kuwait and Riyadh” I am assuming you know how incredibly energy intensive that is, and while I know you don’t care about those emissions, why go through all that when you can manage your water issues with intelligent design of our water system? Do you get off on wasting resources like your president?

            Trump’s economy is benefiting the working class? Really?

            ….While the jobless rate continued to fall during during Trump’s first two years, median household income, adjusted for inflation, grew at an average annual rate of 1.3%. That’s down from a 4.1% annual rate the previous two years and a 1.8% annual rate during Obama’s entire second term, according to U.S. Census data released last month….From Bloomberg, so I’m sure you think this is commie talk, you know coming from one of the most successful capitalists in the modern era. I personally did quite well from the run-up in the stock market since 2009. Well enough that retirement will come before my 60th birthday. But the vast majority of working-class people don’t have much in the way of stock market investments so from their perspective thing are not so rosy.

            Hannity sure serves up some powerful Kool-aid. Drink up! The hard right-wing media machine is in full re-election mode.

  • avatar
    SoCalMikester

    110v plug in hybrids with a sub 100 mile range would probably fit the bill for most americans- even renters. pure electric? not so much.

    ive got a small garage with a 110v outlet, so a priusC that can slowly charge at 110v would suit me. my longest weekly trip these days is under 20 miles each way. work is 8 miles each way but i usually use 2 wheeled transport for that.

  • avatar
    Vulpine

    Expected, even though almost all Americans could have benefitted by it. The current administration wants more pollution in the air, not less.

    • 0 avatar
      How_Embarrassing_4You

      Maybe Greata could head on over to washington in her diesel fueled train while eating out of single use containers and give them what for! Go GREATA!

      • 0 avatar
        FreedMike

        By this same hilarious logic: since Trump is such a big cheerleader for coal, maybe he could switch all his properties to coal-fired furnaces, ditch Air Force One in favor of a coal-fired train for his domestic travels, and a commission a coal-fired clipper ship for when he goes overseas.

    • 0 avatar
      Art Vandelay

      I would counter that we could simply buy a new Versa for everyone rolling around in 15 year old buicks and other cockroaches of the road that have had the check engine light glowing for a decade now and realize a greater environmental return.

      I pay enough freaking taxes…buy your own car. If you are going to keep your hand in my pocket you could at least…ah never mind.

  • avatar

    Who cares. the Government will misallocate our money one way or another. We are screwed either way.

    But Tesla is not going anywhere. I would worry more about FCA and PSA, and Nissan of course.

  • avatar
    brn

    The EV subsidies are still a fraction of the petroleum subsidies.

    I’m in favor of killing both.

  • avatar
    USAFMech

    I expect much better of the B&B, and somewhat better of TTAC’s writers, to not fall for or regurgitate the bait. Let’s clarify:

    “over $4 billion in federal credits EV shoppers had already received” All this means is that the EV buyers didn’t pay marginal taxes on the credit amounts. The amount “missing” from the federal treasury is much, much lower.

    “Nearly 80 percent of the tax credits go to households earning at least $100,000 a year,” As well it should, if we understand Econ101. First, early adopters pay more and must have the disposable income. Second, we don’t know the percentage of these households that are in HCOL areas. $100k in W2 wages in NYC or SF, if you have a family, is a pittance. Those are also the areas where EVs make the most sense and provided the most value/return. This is cheap class warfare bait and especially disappointing coming from a Republican.

    “Frankly, I was surprised that anyone at any automaker thought there was a realistic chance of the 200,000 cap being increased in the current administration,” More unnecessary divisive partisan bait. Trump is, mostly, a mercantilist. Continuing to jump-start an industrial technology where the USA is currently far-and-away leading makes economic sense. This in addition to the greater social good from EVs. I do believe Trump is petty enough to not do it if it benefits states that vote against him versus states that vote for him. But certainly a case can be made that he would go for the economic argument.

    Finally, nothing is “dire”. This will retard adoption, but EV majority conversion is inevitable. Sometimes TTAC feels like the Buggy Whip Guild.

    • 0 avatar
      dal20402

      Virtually all of Trump’s key environmental officials are from the fossil fuel industry. That is going to far, far outweigh his vague mercantilist impulses.

      • 0 avatar
        golden2husky

        Trump is vehemently opposed to environmental protection. And pretty much any government oversight. Look at most of his picks for agencies that are supposed to protect the general population. All filled with lobbyists and industry insiders. It is a total joke. As the saying goes, if you’re not pissed off you are not paying attention.

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