Just weeks after President Donald Trump announced to the dismay of automakers and environmentalists he plans to eliminate all electric vehicle tax credits, a bipartisan group of lawmakers will introduce a bill to put new ones in place.
The group’s bill, named the Driving America Forward Act, will expand the electric vehicle tax credit by 400,000 vehicles per manufacturer. This would be an immediate boost to Tesla and General Motors, which have already blown through 200,000 of the top tier credits. Their vehicles are now only eligible for a $3,750 credit, and that will drop by half by the end of the year.
The bill is sponsored by Democratic Sens. Debbie Stabenow and Gary Peters, Republican Sens. Lamar Alexander and Susan Collins and Democratic Rep. Dan Kildee, Reuters reported. If passed, it could boost electric vehicle sales, which would be a nice reward for automakers that have committed tens of billions of dollars to meet rising global emissions requirements.
The existing $7,500 EV tax credit allows tax payers to deduct part of the cost of buying an electric car. However, it 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.
(Trump moves to kill EV tax credits. Click Here for the story.)
The bill would grant each automaker a $7,000 tax credit for an additional 400,000 vehicles on top of the existing 200,000 vehicles eligible for $7,500 tax credits. It would also cut down the phase-out time to nine months. It would also extend the hydrogen fuel cell credit through 2028.
The bill is estimated to cost $11.4 billion, with all but $91 million of that tally to extend the EV tax credit.
“We have a cap that’s got to go up,” Stabenow told a group of automakers at a dinner last week. “I want to get this done as soon as possible.”
(Click Here for more about GM blowing past 200K EV sales, triggering tax credit drop.)
The proposal has strong backing from automakers, environmental groups and others, but will face opposition. The bill is backed by major automakers including GM, Tesla, Toyota, Ford, Fiat Chrysler Automobiles, Honda, BMW, Nissan, Volkswagen AG and utilities.
GM President Mark Reuss said in a statement “the EV tax credit provides customers with a proven incentive as we work to establish the U.S. as a leader in electrification.”
Michael Brune, executive director of the Sierra Club, said “as we build and grow the clean energy economy, we must continue to invest in tackling the sector that generates the most pollution: transportation.”
(Trump ending EV subsidies by 2021. Click Here for the story.)
Fiat Chrysler is the contrarian in the auto industry. “FCA believes, and 6 years of market performance proves, there is insufficient market demand for such high levels of strong electrification,” the company wrote in a submission to Congress regarding EVs.