It’s been widely reported that the federal EV tax credit might go away with President Donald Trump in the White House and a Republican-controlled Congress. Now, that’s a step closer to reality, and with an added twist. Reuters reports that U.S. Senate Republicans proposed two bills on Wednesday, one to eliminate federal tax credits for new and used EVs and another to add a new $1,000 tax on electric vehicles.
Senate Majority Whip John Barrasso of Wyoming introduced the bill repealing the tax credits for EVs. It was co-sponsored by 14 other senators, including Senate Majority Leader John Thune. If it passes through Congress and is signed by President Trump, the $7,500 new EV tax credit and $4,000 used tax credit would both be eliminated 30 days after the law passes. It would also end federal investment in charging stations and end credit for leased electric vehicles.
The second bill in question imposes a new, one-time $1,000 tax on new EV purchases. The tax compensates for what electric vehicle drivers aren’t paying in federal gas taxes, which are intended to be sent to the states for road maintenance. Most federal funding for road repairs comes from gas tax revenue.
“EVs can weigh up to three times as much as gas-powered cars, creating more wear and tear on our roads and bridges,” said the bill’s lead sponsor, Senator Deb Fischer of Nebraska, adding that ICE vehicle drivers typically pay $87 to $100 annually to the federal fund for road repairs.
U.S. Transportation Secretary Sean Duffy said in his confirmation hearing last month that EVs “should pay for use of our roads. How to do that, I think, is a little more challenging.”
Shortly after Donald Trump’s victory last November, the Alliance of Automotive Innovation, which represents GM, Volkswagen, Toyota, and other automakers, urged him to continue offering federal tax credits on electric vehicles, at least partially. Its CEO, John Bozzella, said in a letter to Trump that automakers face unfair competition “from heavily subsidized electric vehicles and technologies exported from China.”
These bills will likely face opposition from Democrats in Congress, but ending the federal EV tax credit is a popular position among Republican lawmakers. The bill introducing a new tax on electric vehicles may not have the same support.
