As pressure mounts for a major legislative victory in a Republican-controlled U.S. government, heavy-duty horse-trading has taken place. With tax cuts on the table, legislators must find ways to recoup lost revenue, and it appears the electric-car tax credits are on the table.
Bloomberg reports the GOP’s Tax Cuts and Jobs Act proposed slashes the tax credits, valued up to $7,500 depending on the size of the battery pack. The tax credits are a major motivator for battery-electric and plug-in car sales. General Motors, specifically, benefits greatly from the tax credits, which makes its mass-market electric car, the Chevrolet Bolt EV, more attainable. However, every automaker is eligible for the tax credit up to 200,000 electrified cars sold.
After 200,000 electrified cars sold, the tax credits enter a phase-out period until they’re reduced to zero. Even if the tax credit sticks around, it would need reform to keep electric cars somewhat competitive in the U.S. market, which remains skewed towards trucks and SUVs.
Cutting the tax credit could create serious consequences for all automakers, especially since California mandates a certain percentage of zero-emission cars sold in the state. Without a federal tax credit, automakers would likely lower prices even further and lose more on each electric car sold.
The potential killing of the federal tax credit comes as many automakers move to electrify their entire lineups. GM itself has 20 new electric cars on the way by 2023.