General Motors and Tesla Inc. compete in the marketplace; however, GM’s pushing for something that will help Tesla as well: reinstatement of the $7,500 tax credit for electric vehicles.
“Incentives are an important consideration at the phase we’re in,” said Steve Carlisle, president of GM North America. The company is simply looking to for some parity when it comes to the incentives as automakers begin to roll out more and more new EVs, Carlisle noted during Automotive News’ Congress Conversations online event last week.
The current EV credit, which every other automaker is still eligible for, gives buyers a federal tax credit that essentially cuts the price of the electric vehicle by $7,500. Eligibility ends when an automaker sells 200,000 electric models, which the pair blew past in 2018, Tesla hitting the finish line first.
Once the threshold is reached, the $7,500 cap remains in place for anyone taking delivery of that manufacturer’s products for up to the next two quarters. Then, for the next two quarters, the incentive is cut in half, to $3,750. For the next two quarters, customers receive just a quarter of the original credit, $1,850, before the automaker’s incentives dries up.
The initial credit was created by the Obama administration. Automakers pushed the Trump administration to reinstate, extend or create new ones; however, Trump pushed to eliminate the incentives. Despite his efforts, they remained in place until the Biden administration moved in.
As part of his push to put more EVs on U.S. roads, President Joe Biden wants to put a new set of incentives in place.
The new version cuts the credit by $500, but it also changes the structure of the credit phase out after an automaker hits 600,000 vehicles. The first plan reduced the size of the credit in stages over the course of 12 months following hitting the end number. Now it drops to $3,500 for one quarter and then disappears. Owners who bought vehicles in the interim are not eligible to claim the credit retroactively – at this point.
Additionally, the GREEN Act allows used buyers to claim up to a $2,500 tax credit when purchasing a qualifying preowned electric car. The EV must be at least two years old and the sale price cannot exceed $25,000. Income caps for individuals and spouses filing taxes jointly may result in smaller credits, however.
GM’s CEO mentioned during an interview with CNBC the company shouldn’t be punished for being ahead of the pack when it comes to new technology, specifically battery-electric vehicles.
She also noted that the $7,500 tax credit is an important carrot to lead buyers to EVs, adding she would “like to see that (200,000 vehicle limit) lifted and let the marketplace decide and not penalize first movers.”
The Detroit-based auto company’s got plenty of reason to lobby the Biden administration to make the change it wants — 27 billion of them, in fact. Barra revealed a few months back the company’s $27 billion plan to develop battery-electric vehicles as well as autonomous technology by 2030. The plan calls for the launch of 30 vehicles.
The first few of those, the GMC Hummer pickup and Cadillac Lyriq, are expected to join the current Chevrolet Bolt and Bolt EUV starting next year. Tesla CEO Elon Musk has routinely expressed support for reinstatement of the previous credit or the establishment of a new set of credits. However, after his company’s ran out of credits, he cut prices to help offset some of the impact.