Electric Vehicle Tax Credit Survives GOP Tax Reform But Limits Vehicle Sales
Buying electric vehicles in the United States comes with many incentives that go far beyond environmentalism. Among these incentives are the so-called electric vehicle tax credits which, despite the lack of support for renewable energy from the Republican Party, surprisingly survived the recent tax reforms they had spearheaded.
In the tax bill signed by President Trump last December, solar and wind power subsidies were drastically slashed. Against all odds however, the full range of tax incentives for renewable energy, as well as the $7,500 electric vehicle tax credit.
Electric vehicle manufacturers like Tesla and General Motors should be cheering at the news right? Well not exactly as the tax incentives weren't left unscathed by the Republican tax reform bill.
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While the new tax bill retains the electric vehicle tax credit, the incentives begin to phase out after a company sells 200,000 electric vehicles. This is a major issue for large manufacturers as it removes any monetary incentive to buying an electric vehicle as opposed to a conventionally powered one.
The 200,000 vehicle limit was first introduced during the George W. Bush administration, as a way to move the nation toward energy independence. Tesla and GM benefitted from the tax credit thanks to their pioneer status in the electric vehicle industry but thanks to the new tax bill, they are now destined to lose it.
GM lobbied heavily for the tax incentives to be left intact as it puts them at a competitive advantage over other manufacturers being one of the top producers of electric vehicles. Company spokesman Patrick E. Morrissey recently stated that electric vehicle tax credit "would help grow the market for of electric vehicles even more." Tesla, on the other hand, has been relatively silent regarding the changes.
Both companies hope to sell at least 200,000 electric vehicles this year alone which means the incentives will no longer apply to them by 2019. The incentive will still apply to manufacturers like BMW, Volkswagen, and Volvo, who have yet to reach the threshold. However, the aforementioned manufacturers are also planning aggressive sales plans for electric vehicles in the United States which means it will only be a matter of time before they exhaust their subsidies.
