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The US Government Decided Against Stupid And Kept The EV Tax Credit

Politics / Comments

Automakers can breathe more easily again.

A few weeks ago we learned the US House and Senate were considering, as part of their tax reform plan, to eliminate the $7,500 electric-vehicle tax credit, a move widely opposed by major automakers, not just Tesla. For a time, it appeared that the tax credit was on its way out, but Reuters reports the latest Senate version of the bill has kept the credit. Senate and House negotiators, as part of a compromise, agreed to keep the tax credit, which has been in place since 2009.

The credit was first imitated as part of the 2009 stimulus bill that helped automakers, regardless of country of origin, push EVs to the masses. It also served as a driving force to push EV technologies and for those automakers to spend billions on R&D. Although US EV sales haven't exactly been booming, those automakers have made huge tech advancements in less than a decade. Eliminating that federal tax credit simply made no sense, despite the fact government analysts estimated the repeal could have saved as much as $200 million over the next decade. Not everyone may be aware of this, however, but that tax credit availability is capped at the first 200,000 qualifying EVs by manufacturer per year.

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Thing is, no automaker, including Tesla, has sold that many EVs annually. The biggest figure so far, 127,000 EVs, comes from Tesla for this year. The tax overhaul program in its entirety is just being announced, but automakers are surely now breathing a collective sigh of relief.