Electric Vehicle Tax Credits Could Go Away Under Proposed Tax Reform Bill
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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.
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I don’t see the effects on GM being as much as they hav3 used a large part of this already, Also they are father along in their development.
The companies just getting things started will be hurt.
At some point the MFG need to go it on 5beir own as th3 government has seeded this for a while now.
Like everything else the Goverment needs to stop funding so many things as so many begin to lean on that crutch and never try to stand on their own.
Now that GM has sold it’s european operation it’s not as if additional european sales could balance it out. Mind I doubt there’s any demand for this in Europe, there’s tiny demand for electric/hybrid cars & MPV’s are dead. Factor in psa already sells a MPV of similar size in the C3 Piccasso & they also sell Agila sized (one size down from Bolt/C3 Piccasso/Meriva) Citroen C Zero & Peugeot Ion – them based on Mitsubishi i of which they’re obliged to sell. There’s too much overlap & same or similar products in which is a declining market
You do realize that several countries and cities are considering to only let Electrics in?
This would provide a perfect in for GM’s return.
One of them is China, the world’s largest car market. GM has partnered with SAIC to build several new EVs for that market. Buick sells the Velite5, a rebadged Chevy Volt, and soon will sell there a rebadged Bolt EV. Then Cadillac assembles and sells the PHEV CT6 only in China. No wonder Tesla announced a new partnership to assembled the Model S in China!
The $7,500 was an incentive for Americans to buy EV when it was a new idea; but now that the entire industry is going electric, there’s no need for TAX PAYERS to continue footing part of the bill when almost every new car will be an electric vehicle as stated in this article, GM itself has 20 new electric cars on the way by 2023.
In yesterday’s Autoline After Hours (#398 on Youtube.com); AutolineTV’s panel said General Motors hit a homerun with the Chevrolet Bolt and is why sales are increasing and added it might be time for GM to build a SS version of the Bolt with a more powerful engine. They also added that GM’s next electric vehicle should be a CUV with AWD capability and possibly put a EV sedan on the back burner.
If it does take a hit to the automakers it is only short term.. the price of the technology just like every other computer technology always falls down. Look when the HDTV’s came out they were averaging around $2000 and then they dropped $600-700 3-4 years later.. technology is rapidly improving so I’m saying the prices of the technology is and will be cheaper as the demand gets broader
This is a great idea, this will tell weather the industry is really interested in going to electric vehicles or if they just want to talk about it
If the tax credit is removed this year, the state incentives will help. But as many here have posted, the EV is already part of the market, and no new incentives are needed. But if the GOP needs more money, just begin a incremental gasoline and oil tax increase, motivating more EV sales. It may pass with the Democratic support, but those oil lobbyist will fight against any new taxes against them.
I also suggest applying a new tax to all foreign car brands, even if they have local assembly plants. They did that to imports in their nations.
Where the cars and trucks are built should not matter! What matters is where the profits go back to! So tax the hell out of them
Brian, I don’t see the point of adding any unnecessary taxes to any vehicle, electric or otherwise. Would you say the same thing if the government decided to “tax the hell” out of your wages? We need less government, not more. And increasing taxes only makes for more government.
Get rid of legalized bribery and make them fend for themselves in the marketplace.
Screw the SJW’s and their Climate Religion. I help, I recycle dinosaurs.
I don’t recycle!
What’s the point
Duh, let’s ignore the billions in subsidies the oil and gas industry enjoys:
http://www.motherjones.com/politics/2014/04/oil-subsidies-renewable-energy-tax-breaks/
All petrol-only cars and trucks should include a petrol fee at purchase. The better the mileage the car offers, the smaller the fee. The worse the mileage, the worse the fee. Those funds would, in turn, discount green cars.
The idiots buying Yukons because ‘gas is cheap’ should be hit hard with petrol fees.
Petrol? In America we use gasoline and lots of it!
Enough with the subsidy for electrics time to see if they can sell by themselves. As for zero emissions time to figure the increase in utility power plant emissions as electrics increase. Better figure a road tax for electrics while your at it since most states build and maintain roads with the Fuel Tax . I am still a believer that technology has not finished with the internal composition engine. The automotive computers still haven’t been programed to their ultimate capabilities.
It used to be true that roads were maintained by fuel taxes. That is, until governments realized just how much money they could earn from that tax source. I was very disappointed to learn how little of our fuel tax actually goes to pay for the roads and their maintenance. A distressing portion of the fuel tax here in B.C. actually goes into general revenues, which is a real shame.
Internal composition engine? I think you mean internal combustion engine. Regardless, they still use a fossil fuel in the form of gasoline, the burning of which causes massive amounts of pollution. It is possible for us to produce our own electricity by solar power, rather than those filthy coal fired power plants. And that, in turn could drive our EV’s.
I’m not particularly in favour of tax credits, but in the short term if it helps EV’s get off the ground, then why not?
It’s not about ICE cars “peaking”, it’s about the NEED to move away from fossil fuels quickly – yes that includes the whole power grid as of course charging up your EV from a coal plant is not really any better than filling up with gas.
Absolutely 100% correct there Jeff. Solar power is actually very inexpensive to install these days. It’s well worth the small investment up front for decades of electricity. Even China is now stating that they are going to get completely out of the IC engine.
I say let the tax credit die. It only helps the automaker pad their bank account. If an automaker cant produce an affordable product the government should not be in the business of subsiding it. However the governments should legislate that all vehicles sold after a specific year say 2025 are e vehicles.
Automakers can sell for less if they choose to but since the government is providing a subsidy they are keeping the prices artificially high.
There is no reason why an electric cant be sold at the same price of a gas powered vehicle except for the subsidises. The subsidies are helping all subcontractors involved in producing parts to charge higher and discouraging the automaker from negotiating lower prices for the technology and parts.
Once the subsidies are gone the prices for the E vehicles will begin to fall and the technology will improve helping real competition and all of us afford such vehicles.
Governments were weak implementing the subsidies. They should have legislated the production of electric cars disallowing further sales of gas powered cars and forcing automakers to produce e vehicles but then they would have been called autocratic regimes.
Welcome to the best example in democracy. A government incentives its people to do the right thing before discouraging and then disallowing anything they deem to be not in the best interest of the community. My dose of politics for the day….hahaha
Definitely some interesting comments here, but don’t forget that the EV tax credit already has a built in phase out to it. It sounds to me more like the big boys in government are merely trying to help pad their buddies’ bank accounts, all of whom no doubt have large stock positions in oil. They are merely trying to make a lot of noise about something that is really insignificant. Only 200,000 vehicle credits available overall? Honestly, what difference does that make.
Now, considering that Tesla had plans to crank out 500,000 EV’s in a big rush – something that has come to a grinding halt – how long do we think that this incentive would be of any value?
This week, here in western Canada, we have had a gasoline price increase of roughly $1 a gallon. The reason given is that a pipeline has broken in the U.S. and four refineries have shut down for maintenance. I don’t suppose for one second that there was any collusion between those refineries. No, of course not.
At least with EV’s I don’t think that we would be quite so likely to have to tolerate such criminal price gouging as that which happens regularly with gasoline prices.
As for the tax credits themselves, they only amount to a small amount of money. Here in British Columbia we had a very small cash value of EV credits available. Once it was gone, that was it. The Province of Ontario had up to a maximum of something like $14,000 (Cdn) per EV, double what was available here on a per vehicle basis.
Whether we like it or not, EV’s will be the vehicle choice of the future. Why? Simply because EV production is going to be greater than that of fossil fueled vehicles.
The tax credits are a bit like the rebates that used to be offered . Once you give something to people it’s hard to take it back . As the cost of batteries continue to fall and the development of them continue to go forward in weight and size reduction the cost of the new EV’s should start to stabilize .
The Government can’t afford to continue with these tax breaks as more cars start to hit the market the bigger the bill . That money could instead be used in an infrastructure for the evolution of the automobile .
Someone buying a Tesla EV ( for ex. ) shouldn’t receive a tax break for buying one .
EV’s are still very rare in the US at less than 1% of cars on the road – I think the tax credits need to stay in place till at least 2020, this isn’t just about the actual cars but also the recharging infrastructure that is necessary for widespread adoption of EV’s, which isn’t in place yet. There are much bigger items that should be on the chopping block.
Bicycles are good for the environment, and require no additional infrastructure. They are a perfect solution to congestion on the streets and smog in our cities. We should demand action! If a 150k land yacht qualifies for a gov’t credit, so should all modes of transport that do not pollute as much as an internal combustion engine. Also, roller blades, skateboards, wagons, cross-country skis, running shoes. Of course, we would exclude ostentatious goods, such as shoes with cleats.
By the time EVs are affordable, the internal combustion engine will be a more efficient mode of transport. Very little electricity falls from the sky. The rest has to be harvested from coal, gas, nuclear. Anyone else remember VW’s 261mpg XL1?
NO electricity falls from the sky actually, but plenty of sunshine does, from which we are able to generate electricity. But I get your point. I do not recall any VW getting 261 mpg, and I very much doubt that it would be a driveable vehicle…at least the way we think of driving today. Have you forgotten about hydro-electric power?
I have not as my family legacy is in hydro electric power! However, niagara falls is still classified as water *falling* [from the sky].