Automakers Fight for Consumers to Keep the EV Tax Credit

The auto industry fears that consumers will either eat the costs of change or refuse to go electric if the credit is eliminated.

byRob Stumpf|
Electric Vehicles photo

Automakers are not happy about the recent plans to eliminate the EV tax credit for U.S. taxpayers who buy a qualifying electric car. Automotive News reports that key industry stakeholders are now scrambling together to promote the importance of the credit, even calling upon Congress to work with the automakers directly so that the credit can remain in place.

From around the nation, auto manufacturers are sending lobbyists to Washington, D.C. with one goal in mind: Preserve the EV tax credit. The entire automotive industry is going through an important pivoting point, shifting focus from vehicles powered by fossil fuels to electricity. In order to accommodate for the increased cost of new platforms and technology, the industry views the current U.S. tax credits for consumers to be a very important player in mass EV adoption, despite some manufacturers initially expressing feelings that the shift didn't need the government to succeed.

"Abolishing the plug-in credit will hurt consumers who want electric options and threaten the economic potential of the electric drive industry, which already employs more than 215,000 Americans," said the president of the Electric Drive Transportation Association (which represents a coalition of key EV industry players), Genevieve Cullen, in a statement. "The tax credit is also critical to our energy security, providing an alternative to dependence on the world oil market."

It is the industry's collective belief that all tax deductions and credits which have been established under prior administration is now on the chopping block for elimination. Should this happen, leaders in the automotive world believe that the adoption of electric cars will be slowed due to increased cost for the consumer, which ultimately indicates a lower influx of cash for automakers to develop new technology to continue decreasing the cost and economic impact of electric cars, while increasing the vehicle's overall efficiency.

Current tax laws permit any person who buys a new permissible electric car to claim up to $7,500 in tax credits at the end of the year, which most EVs currently will qualify for based on the size of their batteries. This credit is designed to help stimulate the purchase of electric cars in the United States, giving consumers an incentive to buy an electric variant of a popular vehicle rather than the gas- or diesel-powered equivalent. The funding earned by this is to be poured back into research and development by the manufacturer to further improve EV offerings for consumers.

Under the bill being proposed to the house by the GOP, the $7,500 tax credit would be eliminated almost immediately. Automakers believe that this would complicate the process of overall vehicle adoption, as well as meeting the standards put forth by California and other areas where EVs are popular. Additionally, the U.S. may fall behind China, Europe, and other parts of the world in terms of infrastructure for electrification, which could result in a much more difficult adoption process in the coming years.

Though there is no definite answer to whether the EV tax credit will be eliminated, automakers want to ensure that the chance is slim to none. The industry views the credit as important and necessary to the continued growth of electric cars, something which could easily be stunted due to lack of vehicle adoption.