That $7,500 EV tax credit might soon be gone, or will it? The United States, like many other countries has put incentives into place for its citizens to buy electrified cars. Currently these incentives stop when an automaker has produced 200,000 of their electric vehicles, but this might change with this upcoming bill put forth.
For those unaware, the structure for tax incentives in the US is as follows. Before a manufacturer reaches its 200,000th electric vehicle a customer is eligible for the max $7,500 federal tax credit. Once the 200,000th is hit then there will be a phaseout period. For the remainder of that quarter and the next quarter the max stays the same. Once the 2nd and 3rd quarter roll around, the max EV tax credit is then cut in half to $3,750. For the 4th and 5th quarters, the tax credit is once again cut in half to $1,875. The incentive is phased out completely after that.
This system doesn’t seem to be most fair to the auto makers that were early movers in the electric vehicle market place. Companies such as Tesla and GM, who have heavily invested into electric technology and helped make a push for other automakers to follow suit, will likely be the first two companies to reach the 200k mark.
This provides a competitive advantage to the automakers that have been waiting for battery technology before releasing their cars, at least for those looking for maximum incentives.
GM and Tesla both being American car companies may have some sway into the passing of this bill as there will be incentive for Americans to buy foreign made cars.
The bill, H.R.6274, was recently introduced by Rep. Peter Welch (D-VT) who had the following to say:
Transportation is the single largest contributor to greenhouse emissions in the United States. It is urgent that we transition to cleaner, more efficient modes of transportation. My legislation will make electric vehicles and their charging stations more affordable, while saving Vermonters money at the gas pump and reducing their environmental footprint
The bill will aim to accomplish 3 things:
- Eliminated the 200k cap, allowing manufacturers to offer the credit to an unlimited amount of EV buyers for the next 10 years
- Allow the buyers to receive the credit immediately rather than having to wait until they file their tax return.
- Provide a tax credit to purchasers of electric vehicle charging stations to incentivize building infrastructure.
If this bill passes it will be a great help to all electric cars coming in the future. There is no mention of whether or not it will still be the $7,500 tax credit or perhaps some other amount. One area of debate might be the fact that the credit will be able to be given for 10 years. With battery technology getting cheaper and cheaper, building an electric car might be more affordable than an ICE within the next years. Obviously the bill has only just been introduced so things can be changed, make sure to keep an eye out for it.
Source: Peter Welch