EV Credit Survives New Tax Reform Process

Keeping credit expected to help improve sales.

by on Dec.15, 2017

GM CEO Mary Barra has been pushing to keep the EV tax credit as lawmakers have been looking for ways to cut it.

After banging the drum asking for minimal changes to NAFTA for months and not being heard, it appears their similar efforts on tax credits for electric vehicle buyers were heard by the U.S. House of Representatives.

Automotive News reported that U.S. House and Senate negotiators are keeping the electric-vehicle tax credit as part of a compromise package on tax reform, according to a Republican familiar with process.

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In early iterations of the $1.5 trillion House tax bill, the $7,500 electric-vehicle tax credit was eliminated, causing auto industry leaders to push back on its elimination and demand it be left in place.

“I’m a proponent of that staying in because it’s the right thing to do,” Barra said earlier this week. If the incentives are dropped, “that would change the equation” and make battery-based products less financially attractive she added, though she said GM would not back down on its commitment to the technology.

(GM bullish on EVs especially as tax credits spared from new tax reform plan. For the story, Click Here.)

The Senate version bill doesn’t eliminate the incentive, and it’s that part of the package set for release, said the person, who asked not to be identified discussing the details before the bill is unveiled, Automotive News reported.

It’s possible that the details of the unified may be released Wednesday. Each version passed on a strictly party-line vote last month. The tax credit came about in 2009 as the Obama Administration looked for ways to increase more efficient vehicles.

The credit has been the primary motivator to electric vehicle sales. However, the credit may not be as long-lived as its current reprieve implies. Each manufacturer is capped on how many vehicle it sells with the tax credit at 200,000 units.

( to see more about VW’s plans to spend as much as $40B on EVs and autonomous vehicles.)

Tesla Inc. sold about 127,000 Model S sedans and Model X crossovers through August, according to researcher IHS Markit. General Motors debuted its Bolt last year as the first mainstream electric vehicle in the U.S., ahead of Tesla’s Model 3.

In November, GM global product chief Mark Reuss announced the company would introduce two other BEVs within 18 months and have “at least 20” for sale by 2023. The long-term goal is to go “all-electric.” The refrain has been repeated by automakers ranging from BMW to GM to Volkswagen.

(To see more about GM going all-electric, Click Here.) 

Congressional analysts estimate repealing the measure could save $200 million during the next decade.

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