In a little more than two months, America will be swearing a new President, as President-elect Biden will become the 46th President of the United States. On the surface, it seems like electric vehicles may get more support under a Biden Administration than they did under President Trump, however, only time will tell.
Fueling that speculation is the fact that President-elect Biden frequently spoke about the need for the country to accelerate its transition to cleaner electric vehicles during his run for President. On the other side, President Trump has been a vocal opponent of strict CAFE regulations and instructed the EPA to roll back emission standards, allowing manufacturers to sell less fuel-efficient cars and light-duty trucks.
President Trump also tried to eliminate the federal EV tax credit and replace it with an annual EV-tax. However, the President's efforts were thwarted by Congress, as Republicans and Democrats alike understand that electric vehicles are good for America and didn't implement the President's wishes.
Recently, the YouTube channel E For Electric had me on as a guest to discuss what changes we may see in electric vehicle public policy under a Biden administration. My main comments centered around the federal tax credit, because I believe it's in need of restructuring. Here are my recommendations to President-elect Biden for improving the tax credit:
1) Restore Tesla & GM's incentive qualification. When the EV tax credit was conceived under President Bush (W), they couldn't have predicted that two companies would jump so far out ahead of the rest of the industry in sales as Tesla and GM have. Tesla and GM are US-based auto manufacturers and having them at a competitive disadvantage to imports that qualify for the tax break isn't right in my opinion. They shouldn't be punished for being leaders in electric vehicle production. President-elect Biden has already signaled that he may restore their tax credit eligibility.
Secondly, remove the 200,000-vehicle limit per manufacturer and make it unlimited, but add an end date. I believe that by the end of 2025 EVs will no longer need subsidies, as they will already have reached cost parity with ICE. Therefore, extend the point-of-sale rebate for five more years, and then it goes away entirely.
2) Convert the tax credit to a point of sale rebate. In its current form, the tax credit favors more affluent car buyers who can afford to pay upfront and wait months for the tax credit to be repaid. Economically disadvantaged car buyers may not be able to put out the extra money and wait for it to be refunded. Plus, it will simplify the entire process and make EVs look more attractive on the lot.
3) Initiate a ceiling on the MSRP for the EV to qualify. I just don't think the person paying $200,000 for a Porsche Taycan Turbo really needs the tax credit, and it won't affect their purchasing decision. I'd prefer to see those tax dollars go towards helping someone get into a Chevy Bolt EV or a Volkswagen ID.4. I think the ceiling should be around the $80,000 to $85,000 price range, and definitely under six-figures.
4) Raise the bar to qualify for the rebate. Currently, an EV only has to have a 4kWh battery to qualify for the minimum tax credit of $2,500 and that's way too low. Over a decade ago a 4 kWh battery was a good size for a plug-in hybrid, but it's not anymore. Additionally, the tax credit maxes out when the vehicle has a 16 kWh battery, which is small by today's standards.
I would propose changing the measuring stick from battery size to EPA range rating and offer $30 for every mile of EV range. In order to get the full $7,500 rebate, the vehicle would need to have a 250 mile EPA range rating. I plug-in hybrid with a 30-mile EPA range would get a $900 rebate. A 200-mile BEV would get $6,000. It would be easy to calculate and understand. Currently, very few people (including car sales personal) understand how to calculate the tax credit, they just rely on what they are told.
The host, Alex Guberman, also points out that President Trump did support GM's sale of its Lordstown factory to an electric vehicle startup that intends to use the factory to build the Lordstown Endurance pick up truck. While I agree it was a good move to intervened to help save manufacturing jobs, I don't think the President really cared that the factory was going to make EVs, he just didn't want the area to lose manufacturing jobs since he promised that wouldn't happen under his watch.
There are some additional weekly news stories in the video, but the section on Trump and Biden starts at the 2:10 mark and goes on until 15:25.
So check out the video and let us know what you think. Do you agree the federal tax credit needs updating? If so which of my suggestions would you like to see implemented? As always, let us know your thoughts in the comment section below.