Bad news for Tesla, GM, Ford and, uh, lots of automakers.
President Trump and the Republican-controlled House and Senate are keen to dramatically overhaul the US tax code, which isn’t surprising. There could be some good things to come of this, and some not so good things. It all depends on whom you ask. Automakers, however, aren’t too pleased with the initial House proposal to repeal the $7,500 federal EV tax credit after the 2017 tax year. Automotive News reached out to a number of auto industry insiders, and all were concerned about the proposed cut.
“There is no question that the elimination of the federal electric vehicle tax credit will impact the choices of prospective buyers and make the electric vehicle mandate in 10 states — about a third of the market — even more difficult to meet,” said Gloria Bergquist, spokeswoman for the Alliance of Automobile Manufacturers. Furthermore, this proposal puts the car industry “in the middle between contradictory government policies.” On the one hand, the proposed overhaul favors large corporations, but at the same time automakers, both foreign and domestic, are right now planning to launch a lot of new EVs.
Considering EV sales are already relatively slow in the US, eliminating the $7,500 credit could, and likely will, discourage future buyers who aren’t already on the EV bandwagon. Those who support the repeal are arguing that EV buyers are, generally speaking, wealthier than average car buyers and can afford to make do without the credit. Automotive News further points that Tesla especially has a lot to lose if the proposed repeal goes into effect, and this comes just when it’s working (more like struggling) to get its mainstream Model 3 into mass production.