U.S. Congress declined to extend the current EX tax credit limit of $7,500 this week. GM, along with Tesla, had been pushing to have the limit increased, but the proposal was met with significant opposition in the White House, Reuters reports.
Under the current system, EV tax credits are phased out once an automaker sells 200,000 electric vehicles. After that point, customers will no longer be eligible for the full $7,500 deduction, with the credit amount tapering off until it reaches zero. Both GM and Tesla have already surpassed the 200,000 unit limit, with Tesla’s credits set to expire completely after December 31, 2019 and GM’s petering out after March 31, 2020.
An official credit extension proposal had been put forth by Michigan Democratic Senator Debbie Stabenow. Under the bill, manufacturers would receive $7,000 tax credit for an additional 400,000 vehicles, while the current EV tax credit of $7,500 would remain in place for the first 200,000 vehicles. Stabenow said her proposal saw “extreme resistance,” in the White House.
In a statement released earlier this month, GM said a federal EV tax credit “provides customers with a proven incentive,” to trade in for an EV and helps to make the pricier vehicles “more affordable for all customers,”
“Modifying the tax credit will allow all customers to continue to receive the full benefit and provide them with a greater choice of vehicles,” the company also said.
GM was also keen to extend the EV tax credit as the current situation may put it at a disadvantage going forward. Rival automakers like Ford or FCA have not burned through the available 200,000 tax credits, so customers who buy EVs from those brands will still qualify to receive $7,500 back. With EV prices already higher than comparable combustion engine vehicles, it will be hard for many customers to ignore the potential savings of buying an eligible vehicle versus one from GM or Tesla.