Carmakers Push Congress To Extend EV Tax Credit

Energy
Tuesday, June 14th, 2022 12:55 am EDT

Top executives from General Motors, Ford, Stellantis, and Toyota have lobbied Congress to lift the 200,000 sold vehicle cap on the $7,500 electric vehicle tax credit, citing higher costs to produce zero-emission vehicles, according to a letter reportedly seen by Reuters.

“We ask that the per-(automaker) cap be removed, with a sunset date set for a time when the EV market is more mature,” the automakers said in a joint letter, as reported by Automotive News. “Recent economic pressures and supply chain constraints are increasing the cost of manufacturing electrified vehicles which, in turn, puts pressure on the price to consumers.”

The letter comes amid growing concerns among auto industry executives that the window is closing for US Congress to extend electric vehicle tax credits before the coming midterm elections … which, if things weren’t already bad enough, are expected to go badly for Democrats.

What’s it all about, Alfie?

For those of you who are confused by all this, a manufacturer’s vehicles are eligible for up to $7,500 in federal tax credit incentives until that manufacturer hits a benchmark of 200,000 vehicles sold — well, until a bit after that milestone. Once an automaker sells a total of 200,000 units that qualify for the credit, a phaseout begins. The available tax credit is reduced by 50% for the two quarters following the 200,000 benchmark ($3,750), then drops to 25 percent ($1,875) for the subsequent two quarters. After that point, the vehicles made by the automaker no longer qualify.

Both GM and Tesla have already hit the cap with a mix of products, so buyers of their electric products are no longer eligible to receive the full federal tax credit (if any).

That said, Tesla seems to be doing just fine without the benefit of the federal tax credit, having sold more EVs than the brands mentioned here by an order of magnitude already in Q1 … a fact that’s been noted by none other than the Democrats’ favorite rotating villain, West Virginia Senator Joe Manchin, who questioned the need to extend EV tax credits in the face of strong consumer demand and lower costs associated with overseas production of battery components. “There’s a waiting list for EVs right now with the fuel price at $4,” he said, back in April, when gas was only $4. “But (carmakers) still want us to throw $5,000 or $7,000 or $12,000 credit to buy electric vehicles? It makes no sense to me whatsoever … when we can’t produce enough product for the people that want it and we’re still going to pay them to take it — it’s absolutely ludicrous in my mind.”

I always hesitate to agree with the designated villain, but I’m not sure he’s entirely wrong here. What do you guys think? Do we need more government incentives to promote EVs in the US, or should we try to get the Dems to go full-on Sweden and drop the ban hammer on fossil-fueled cars while they’re still in control of both houses? Scroll on down to the comments and let us know!