2014 Budget Proposal Ups EV Credit To $10,000 Point Of Sale Rebate Thru 2018
When President Barack Obama delivered the 2014 budget proposal to Congress on Wednesday, it contained some long awaited changes to the current federal credit system offered on the purchase of new electric vehicles.
The current EV incentive program gives purchasers of electric vehicles the ability to deduct up to $7,500 off their taxes at year’s end. This existing system has two definite flaws to it:
- Claiming the Credit – EV owners have to had paid $7,500 in taxes during the financial year to receive the $7,500 back at tax time, making the credit almost a class-oriented program
- Purchase Timing – The program artificially inflates purchases at year’s end when the credit refund will come quickly, and deflated demand during the beginning of the year, when purchasers know the credit is at least a year away from being realized
Under the new proposal, that credit would jump to $10,000 and be taken right at the point of sale, when the transaction takes place.
This plan does not sit well with the National Automobile Dealers Association, as the onus would shift to the dealer to qualify for the credit on behalf of the consumer.
Bailey Wood, NADA spokesperson said that “we just don’t think it’s workable in the showroom.” Still, we imagine if it goes through, they will figure it out just fine.
It is worth nothing that this increase to the EV incentive and the changing of the program to be rebate-based (in the consumer’s eyes anyway), is a long way from becoming reality.
To say that Republican support on electric vehicles has diminished of late, would be a grand understatement. And given how this is a key component of the President’s call for million plug-in electric vehicles on the roads by 2015, we are skeptical if it has a chance to succeed.
Those prospects of potential failure did not stop the lobby group of the automakers, known as the “Alliance of Automobile Manufacturers,” from getting fairly excited about the proposition of making their plug-in vehicles easier to sell.
“We generally support incentives that can help move our models from dealer lots to people’s driveways, but we defer to policymakers in setting the precise dollar amount needed to increase sales.”
The budget also contains other provisions on the development of new battery technologies and manufacturing processes to bring the cost of electric vehicles down, as well as to fund other alt-fuel research. In total, a $2 billion dollar trust would be set up, but given the funding would come from diverting oil revenue, we find it unlikely to get past the GOP-led House.
The new $10,000 EV incentive proposal would replace the current system, and be in effect until 2018, at which point it would be phased out by 2021. The estimated cost of the credit would be $4.2 billion dollars.
Given some very high-profile recent failures in both the battery (A123) and automotive sector (Fisker) of late, the entire new proposal for simplifying and increasing the EV credit is on very shaky ground, so you might want to just lightly pencil in that $10,000 rebate off your next electric vehicle buy.