Eventually, the federal government will have to tackle the tax credit allotted for electric car purchases. And now, a third member of Congress has proposed changes to the system.
Republican Senator Dean Heller of Nevada has reportedly introduced a bill to lift the 200,000-vehicle cap for the credit, Reuters reported Tuesday. The bill has not been posted to the Senate’s website, but Reuters obtained a copy of the bill’s text. Instead of the 200,000-vehicle cap, automakers would receive unlimited tax credits through 2022.
The proposal also states that credits would go away entirely come 2022 for every automaker. Some companies have already said the proposal is unfair to automakers that haven’t begun selling electric cars, or wouldn’t have volume production for EVs by 2022. But, for automakers like General Motors and Tesla, it would be a major victory.
Senator Heller’s bill comes after Republican Senator John A. Barrasso of Wyoming introduced his own bill to gut the tax credits entirely. His proposal also creates a new alternative-fuel vehicle tax. Today, plug-in hybrid and electric car owners do not pay into the gas tax in the United States, which helps pay for infrastructure improvements. The bill aims to create a Federal Highway user fee for drivers of any alternative fuel vehicle.
Currently, once an automaker sells 200,000 qualifying vehicles, the tax credits enter a sunset period. Using Tesla as an example—it’s the first automaker to reach the cap—the company will see the $7,500 figure cut in half for the first six months of 2019. The final six months of 2019 will see the figure halve itself again until the cars receive $0 in tax credits come January 2020.
GM believes it will reach the threshold later this year, or in early 2019.
In the U.S. House of Representatives, Democratic Rep. Peter Welch of Vermont has introduced a third piece of legislation. His bill aims to lift the tax-credit cap like Senator Heller’s bill, but gives automakers an additional 10 years. The bill also calls for the tax credit to be applicable at the point of sale, which would likely be more appealing to consumers.