Your Power Company Wants Congress to Keep the EV Tax Credit
36 different power companies urge congress to keep money in new car buyer's pockets.
In case you didn't know, GM and Tesla are about to hit the Electric Vehicle (EV) tax credit cap. The program, which allows owners of new EVs to claim a credit on their taxes thanks to the purchase of a new electric car, is set to expire once a manufacturer reaches 200,000 units of sale. In a letter to congress last week, 36 public utility companies reached out to express the need to not only keep, but extend the tax credit to all manufacturers building electric cars.
Currently, if you happen to purchase a new electric car, you are entitled to a tax credit worth up to $7,500. Though there have been attempts to disassemble this bill in the past, none have passed after repeat push back by the auto industry. But as this cap comes closer to expiration thanks to the number of new owners who are claiming the credit, two of the top selling manufacturers are at risk for losing the credit, and essentially risking the adoption of electric cars.
Even though Tesla and GM may hit the cap, consumers will still have a few months of discounted credit to take advantage of. Consumers will be able to claim up to $3,750 for six months after the cap is met, and then up to $1,875 for the remaining six months until the credit is completely dissolved.
The letter states that most American manufacturers are likely to hit the 200,000 unit cap in 2018, outlining that the "new generation" of electric cars are just on the cusp of release. The assertion is certainly correct, as more mainstream manufacturers sink billions of dollars into electrifying their fleets. The Germans specifically are amping up their efforts, with many manufacturers promising new model pushes and even more places to build their cars.
This effort brings into question of the subsidy should have ever been unit-based. An argument can be made that instead of a per-car basis, it should be made on a time-based expiration. Most consumers found early EVs to be quite expensive. Battery technology was quite expensive, and component prices are still dropping as time moves on. This gave an advantage to those who could afford high-priced EVs and allowed those who could purchase multiple units to claim multiple tax credits. Of course, this initiative is also to benefit the automaker, allowing consumers to become the equivalent of Kickstart backers and funding new models with newer technology.
Another plausible argument is to take the "America first" approach which is being pushed heavily in the country today. Tesla CEO Elon Musk Tweeted to U.S. President Donald Trump regarding the fairness of United States automotive tariffs, specifically that it is substantially lower than that of China, where electrification is thriving. Should the bill be revised to extend the credit for domestic automakers?
Consumers want electric cars, and with new models right around the corner, it's only a matter of time before the number of buyers increase. However, this number may slow if battery technology is not improved upon, or if the cars simply cost more to purchase in the long run. If the power companies have their way, the tax credit could potentially be revised and continue to stimulate the American auto industry.