US Lawmakers Propose Extension Of Current EV Tax Credit By 400,000 Units
To provide an added incentive for new car buyers to go with an electric vehicle on their next purchase, lawmakers are now proposing new legislation that will expand the currently electric vehicle tax credit in the United States.
The new bill will expand the tax credit to an additional 400,000 vehicles per manufacturer. This will be particularly useful for automotive manufacturers who have already exceeded or are close to the 200,000 cumulative EV sales set by the previous legislation.
As of the moment, Tesla and General Motors have already exceeded that limit. The existing credit for its vehicles is already nearing their end, which means that new buyers will no longer be getting tax credits for their respective vehicles.
The existing EV tax credit allocates US$7,500 to new electric car buyers. However, this benefit will gradually be phased out over 15 months once a manufacturer hits 200,000 units in cumulative sales.
Tesla's tax credit is now only US$3,750. Its credit was diminished shortly after it hit its target in January. Meanwhile, GM's tax credit fell to the same amount just this month. By the end of the year, both companies' credit benefits to buyers will end entirely.
The new bill, which is being sponsored by Democratic and Republican Senators, aims to further expand the current limit by as much as 400,000 vehicles on top of the 200,000 units allocated by the current tax credit legislation. Under the new bill, called the "Driving America Forward Act," buyers will only be getting US$7,000 for new EV vehicle purchases. Similar to the previous legislation, buyers can deduct the credit to their tax liabilities to cover part of the cost of buying their new electric vehicle. The credit will only apply to new car buyers and only to its first owners.
Apart from the EV tax credit, the bill also extends the current hydrogen fuel cell credit to 2028. According to legislators, the bill will cost the country around US$11.4 billion. Proponents of the bill hope to attach the proposal to tax legislation in the coming months. While the bill does have strong support from the various automakers and several environmental groups, it will still likely be facing opposition.
The White House previously proposed to completely eliminate the EV tax credit, claiming that it would save the government US$2.5 billion in the next ten years. Some Republicans have even proposed to impose a highway user fee for EV drivers, which will be used for road repairs.
Some of the automakers that have vocally expressed their support for the new bill include Tesla, GM, Toyota, Ford, Fiat Chrysler, Honda, Nissan, BMW, and Volkswagen AG. These companies stand to benefit the most out of the extension given the billions of dollars they have spent towards meeting global emission standards.