House Republicans propose scrapping $7,500 EV tax credit

The Alliance of Automobile Manufacturers warns that dropping the EV tax credit would likely impact sales of electric vehicles. Tesla photo.

Dumping of EV tax credit panned by automakers, environmentalists

US House Republicans looking for ways to fund tax cuts are proposing to eliminate the $7,500 EV tax credit which helped boost sales of electric vehicles.

Currently, the EV tax credit phases out after an automaker sells 200,000 plug-in vehicles.  The tax credit was implemented to help offset the pricier vehicles.

Eliminating the Obama-era tax credit could hurt a number of automakers, including General Motors, Tesla and Nissan, according to Gloria Bergquist, spokeswoman for the Alliance of Automobile Manufacturers.

”The potential elimination of the federal electric vehicle tax credit will impact the choices of prospective buyers and make the electric vehicle mandate in 10 states – about a third of the market – even more difficult to meet,” Bergquist said.

Reuters reports GM is ready to fight for the credit.  The automaker says the tax credit is “an important customer benefit that can help accelerate the acceptance of electric vehicles.”

California and a dozen other states have mandates that require automakers to produce an increasing number of zero-emission vehicles.  They say the credits are essential to meeting the targets.

Without the credit, the cost of GM’s Chevrolet Bolt would increase from about $35,000 to $42,500.

Critics of the EV tax credit say buyers of electric vehicles tend to be wealthier than average Americans and therefore do not need the subsidies.

Environmentalists joined automakers in strongly rejecting the proposal.

“The EV tax credit repeal would cede US leadership in clean vehicles, putting our companies at a competitive disadvantage and threatening jobs while costing drivers more at the pump and increasing pollution,” Luke Tonachel, director of the National Resources Defense Council’s Clean Vehicles and Fuels Project told Reuters.

Other energy tax credits are also on the House GOP chopping block.  Production and investment tax credits for solar, geothermal, fuel cell, wind energy and other clean energy projects could be axed.

They are also calling for the phase out of the credit for residential energy-efficiency projects and a credit for producing oil and gas from marginal wells.