The current $7,500 tax credit phases out after 200,000 vehicles.
A group of U.S. lawmakers plan to introduce a bill to extend the electric vehicle tax credit as a boon for the market, according to a recent Reuters report. Under this legislation, the new credit structure would cover more vehicles, but phase out faster than the current incentive.
The bill is a bipartisan effort, sponsored by Democratic Senators Debbie Stabenow and Gary Peters, as well as Republican Senators Susan Collins and Lamar Alexander, and Democratic Representative Dan Kildee. Under the bill, called the “Driving America Forward Act”, a $7,000 tax credit would cover the first 600,000 vehicles an automaker produces. However, it would also shorten the phase-out schedule to nine months.
Under the current scheme, there is a $7,500 federal tax credit for a manufacturer’s first 200,000 vehicles, with a phase-out period over 15 months. Tesla’s tax credit was halved as of January 1, and will disappear entirely by the end of the year. General Motors also just crossed the threshold, with its tax credits being halved to $3,750 on April 1. GM’s tax credit will phase out next year.
Extending the hydrogen fuel cell credit
This bill also covers hydrogen fuel cell vehicles, extending their tax credit through 2028. “We have a cap that’s got to go up,” Stabenow told automakers. “I want to get this done as soon as possible.” Major automakers like Tesla, GM, Toyota, Ford, Fiat Chrysler, Honda, BMW, Nissan and Volkswagen all back the proposed legislation. According to the Reuters report, the bill is estimated to cost $11.4 billion, with all but $91 million slated to support the extended EV tax credit.
While the bill would provide a boost to electric car sales, there are some in Congress who oppose it. Republican Senator John Barrasso, chairman of the Environment and Public Works Committee, proposed ending the credit entirely in favor of charging EV owners a highway use fee to fund road repairs.
In March, the Trump Administration proposed immediately eliminating the current $7,500 tax credit. The White House contended that decision would save taxpayers $2.5 billion over the next decade.