Electric Vehicle Buyers May Start Losing Their Tax Credits
On Thursday, November 2, House Republicans proposed eliminating a $7,500 tax credit for citizens who purchase electric vehicles. This poses a significant threat to companies like Tesla and General Motors, both of whom have been pushing via digital marketing and other initiatives to increase electric auto sales. The tax credit provides an additional incentive for prospective customers. Without that incentive, they’ll be much less likely to opt for an electric vehicle.
The Players Affected by the Loss of the Credit
The repeal would take effect after the 2017 tax year, if it is adopted. It’s part of the GOP’s plan to significantly overhaul the existing tax code. Currently, the Senate is already working on a separate version of the overhaul. Electric car manufacturers have expressed an interest in working with lawmakers to maintain the tax credit. Pat Morissey, a GM spokesman, explicitly cites the company’s belief in “an all-electric future” in a recent statement.
Lawmakers across the aisle have also expressed their concerns. Michigan Democrat Senator Debbie Stabenow says, “In so many ways this is a shell game that when it ends hurts a lot of jobs in Michigan and middle class families and the benefits go to the wealthiest Americans.” Stabenow goes on to call the potential repeal “not a good deal.”
Further Consequences of the Tax Incentive Repeal
It’s worth noting that a repeal could result in complications due to unclear policy shifts. For instance, California regulators have issued a sales mandate pressuring carmakers to sell a certain number of electric vehicles each year. If the repeal is successful, it will be much more difficult for carmakers to reach those sales goals. Contradictions between federal laws and state laws will result in significant confusion.
The repeal would also make a clear statement to the global community regarding the United States’ role in promoting and embracing cleaner forms of energy. According to Luke Tonachel, director of the Natural Resources Defense Council’s Clean Vehicles and Fuels Project, “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.”
Although the new tax plan has yet to be adopted, the potential repeal has already impacted electric vehicle manufacturers. After various news outlets reported on the story, Tesla’s stock dropped by 8.9 percent, although it did rebound later in the day.
Despite slow sales growth, carmakers across the industry look forward to a bright future for electric cars. It it were to pass, this repeal could jeopardize that future.