Congress Says Nay to Expanding EV Tax Credits

by admin December 24, 2019 at 11:03 am

Prior to Congress taking the rest of the month off to relax and presumably gear up for an impeachment trial, they first had to settle their year-end tax package. Automakers were hoping that would include an extension of electric vehicle tax credits, but it was a doomed proposition.

An extension was initially included in the bipartisan Driving America Forward Act, which manifested this spring, before being incorporated into the Democrat-friendly GREEN Act (Growing Renewable Energy and Efficiency Now). That got it through the House but not the Republican-controlled Senate, which wasn’t interested.

While the current $7,500 EV tax credit remains in place, Tesla and General Motors have both reached their 200,000-vehicle quota. Naturally, they (and other automakers) lobbied for an expansion, one which would have seen a $7,000 credit kept in place until a manufacturer sold 600,000 electric automobiles. Several Republican lawmakers openly shared their distaste for the plan, though few more openly than Senator John Barrasso of Wyoming, who had an opposing bill — called the Fairness for Every Driver Act — interested in reducing subsidies on the grounds that EV credits have already done enough. 

Citing the over $4 billion in federal credits EV shoppers had already received, Barrasso claimed  the system has already encouraged automakers to commit t manufacturing more electric cars, arguing it’s no longer fair to burden taxpayers.

Barrasso said it’s time to refocus on infrastructure (including adding more EV charging stations), allowing states to expand on subsidies if they choose, remaining highly critical of where those federal credits have been going. “Nearly 80 percent of the tax credits go to households earning at least $100,000 a year,” he said. “These car buyers don’t need a taxpayer subsidy.”

President Donald Trump was also alleged to have been against expanding EV credits, according to Senator Debbie Stabenow (D-MI). “There has been extreme resistance from the president,” she told Bloomberg last week. “I don’t know why the White House would want to stop jobs and the future of the auto industry.”

Studies have indicated that widespread electrification may actually hurt jobs, as EVs require less manpower to manufacture (and with the brunt of battery labor typically performed outside of the United States). However, the counterpoint has often been that pushing new tech will help grow high-tech professions. Unfortunately, the White House only agrees with the former positio, warning Congress that taking a stand on EV subsidies could stymie the year-end tax package.

“Frankly, I was surprised that anyone at any automaker thought there was a realistic chance of the 200,000 cap being increased in the current administration,” Navigant analyst Sam Abuelsamid told Automotive News this week.

If you’re wondering how dire the situation is for automakers, it depends on which ones you’re talking about. General Motors and Tesla will probably see interest drop now that the credits are drying up, but the next manufacturers to hit the 200,000-unit mark are likely several years away from having to be truly concerned. By then, EVs could be so good (or affordable?) that it might not matter.

[Image: Welcomia/Shutterstock]

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