Fear Not, Senate Version Of Tax Bill Keeps EV Tax Credit Intact

4 days ago by Steven Loveday 47

Bolt

2017 Chevrolet Bolt EV

Though many details have yet to be released, a senator has revealed that the Senate’s revised version of the most recent tax bill will keep the EV tax credit intact after House Republicans proposed its removal on December 31st of this year.

Senator John Hoeven from South Dakota shared the good news with the Financial Post. The publication recently provided a detailed account of the latest version of the Senate tax bill. Included was the following information in reference to Senator Hoeven’s statement:

“The South Dakota Republican said the measure also preserves existing clean energy tax incentives such as for electricity production from wind. It preserves a tax credit for electric cars as well.”

Tesla Model 3

Tesla Model 3

The Financial Times also pointed out that Republican Senator and Senate Finance Committee member Dean Heller intends to vote against repealing the EV tax credit as well.

According to Automotive News, automakers haven’t been pushing very hard to keep the credit, although they have made statements that they would like to see it live on.

The overall result of the House bill would otherwise be wildly positive for the bottom line of automakers (reducing the overall corporate tax rate from 35% to 20%), so many manufacturers are likely not wanting to create too many waves, willing to trade the loss of the tax credit for the bottom line relief.

So far, only General Motors has said publicly that it will fight to keep the credit. A Ford lobbyist sent a letter the to House Ways and Means committee on the subject of tax reform and the $7,500 EV tax credit wasn’t even mentioned. Ford spokeswoman, Christin Baker, shared:

“Our focus in tax reform is on key elements that will help put American companies on a level playing field globally. We will continue to promote electrification through other policy initiatives.”

The Alliance of Automobile Manufacturers (the working title that almost all the OEMs put out statements under) is monitoring the situation, and made a positive statement to keep the credit, but mainly due to its concerns of still having to sell a certain threshold of all-electric vehicles in CARB states; a more difficult proposition without the $7,500 credit.

“The potential 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.”

Instead of by the automakers, a lobbying push is being led by the Electric Drive Transportation Association, which represents about 50 different automakers.

Not surprisingly, the publication points to utility companies’ support of keeping the EV tax credit intact. Some of the nation’s largest utility companies are joining forces with the Sierra Club to make their stance known. The second-largest utility company in the U.S. by market share, Duke Energy, asserted:

EV

2018 Nissan LEAF

“The existing tax credits have been a powerful way to promote the use of electric vehicles. Duke Energy supports the ongoing discussions with policymakers on the best way to continue this progress.”

Brian Herzog spoke on behalf of California’s largest utility, PG&E Corp. He stated:

“We support credits and incentives, and see them as a key piece of the equation when it comes to fostering the continued growth and development of the market for EVs, along with the continued build out of charging infrastructure.”

Obviously, not all Republicans see eye-to-eye regarding this tax reform. In fact, thus far almost everything that the Trump administration has proposed has seen much contention, especially at the Senate level. Nonetheless, it’s good to know that the Senate plans to keep the EV tax credit intact. There may be a preliminary vote soon, than a subsequent Conference Committee between the two governing bodies, which will give us a better idea of what lies ahead.

If anything actually comes of any of this, it will likely be a long time before we see any real progress one way or the other.  There has been a concern (at least to Republicans) that the House will get squeezed by an impatient President looking to get his tax bill passed, accepting many of the Senate’s changes – which would be good news for those looking to see the EV tax credit live on.

Source: Financial Post via Electrek, Automotive News

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47 responses to "Fear Not, Senate Version Of Tax Bill Keeps EV Tax Credit Intact"

  1. ClarksonCote says:

    It would’ve been nice if the Senate version opted to sunset all the credits once one vehicle manufacturer reaches 200k cars.

    That way it’s a bit of a win-win. The politicians can claim a victory in reducing spending, and that would also prevent manufacturers from being rewarded for being slow to adopt EVs.

    Put another way, if it doesn’t sunset for everyone, the manufacturers who have done the most to sell EVs effectively get penalized.

    1. MarkT says:

      I think a better compromise would be to sunset at the end of 2018. For those manufactures who invested early (GM/Tesla), they would benefit the most, while those that waited on the sideline lose out on the credit.

      1. CDAVIS says:

        @Mark T said: “I think a better compromise would be to sunset at the end of 2018…”
        ———

        I agree with that or alternatively change to similar as currently done for Solar ITC.

        If the current EV tax credit incentive is not modified it would be better to repeal it entirely … if not repealed, it will serve to reward the EV car maker laggards and penalize the EV car maker early entrants ( mostly Tesla & Nissan).

      2. ClarksonCote says:

        I’d be fine with that too.

      3. (⌐■_■) Trollnonymous says:

        +1000000

        Wholeheartedly agree!

    2. WadeTyhon says:

      So far, things are going basically how I have expected they would.

      The house has their version that kills the credit. The senate has their version that preserves the credit.

      Now they need to come together to build a version that both the house and senate could conceivably pass.

      So I think that, when all is said and done, something very similar to what you state will occur. They will change this to sunset the credit at the end of 2018 and it will be completely reduced by the end of 2019.

      But the EV credit is a small disagreement between the two. It is the much larger scale aspects of the tax bills that will probably end up killing the bill.

      1. Dan says:

        One must do whatever possible to have this whole tax measure fail because it is, in best Republican form, little other than a big gift to wealthy and high income people including the non U.S. citizens who own 1/3 of the equity market’s value.

        The idea of having the whole EV credit sunset at the same time for all manufacturers is probably the best approach. A slightly slower taper would be good to ease the transition.

        Still, this is a small matter compared to the greed driven injustice that is this “reform”. In that light no change is the best realistic outcome.

    3. scott franco says:

      Yes, they made EVs too fast, sold them all and get penalized by having too much money.

      Did you even TAKE math? Flunked it eh?

      1. ClarksonCote says:

        Your comment shows how little you understand basic economics. And your attitude is even worse. But I guess it’s hard to expect more from someone that can’t even properly capitalize their name in a web form.

        I’m glad this kind of legislation is not left up to you.

        “Hey, let’s take all those innovative companies that worked hard to develop new EV technology, and give them a disadvantage to the tune of $7500 on each sale, by taking away their credit, and letting the laggards still benefit.”

        Yeah, that’s real fair.

        1. Mark.ca says:

          The credit was created to push ev adoption not to compensate manufactures that were early to the game. You sound like you care more about the car companies than evs. I could not care less that Tesla, GM and Nissan will be out of credits soon.
          If you like sunsets just take a walk outside.

          1. TwoVolts says:

            Completely agree. Too much obsessing over ‘fairness’. Let’s continue to incentivize the laggards.

            1. ClarksonCote says:

              You’re both missing the point. We both agree the credit is to push EV adoption.

              If a credit goes away for the automakers that are most ahead in this area, but not for the laggards, do you think the automakers who make the most EVs will continue to do so? It’s likely many of them will scale back EVs, since they’re instantly at a significant competitive disadvantage.

              Leaving the credit in place does not continue to spur EV adoption of the leaders in EV adoption are put at a significant disadvantage. It’s precisely for that reason that the credit should sunset for everyone.

              1. Mark.ca says:

                I do get what you’re saying and agree that is a bit unfair to the early participants but do we really want to punish, for example, a manufacturer that placed on the market the most efficient ev, the Ionic? What else would we be missing? Anyway, as i said below, we need a dynamic tax on gassers to support evs so we don’t have to worry about credit expirations.

    4. EVShopper says:

      It’s not penalizing early adopter or rewarding laggards. They all get the 200K limit. What it is doing is benefitting taxpayers that buy electric, and we want as many people to do that as possible.

    5. mx says:

      IT would be nice if the house and senate dropped the 24 carbon tax rules that make unprofitable fracking sites profitable.

  2. menorman says:

    It’s good to see it preserved, but it could be tweaked a little while still providing benefits. One way could be to delay the end for two years to December 31, 2019. By that point, almost every automaker would have plenty of BEVs on the road. Another possible tweak could be to reduce the phase-out trigger to 150k total vehicles, but then extend each level of the taper by a quarter. The latter could conceivably benefit more people in total as long as automakers are willing to provide a competent ramp-up of production to meet demand.

  3. ffbj says:

    Yeah, the wind farming states TX, IA, the Dakotas, put the kabosh on that idea, part of the house version.
    Though I don’t think anything big will pass, too many lobbyist trying to protect their turf, since someone will be hurt and they don’t want it to be them.

  4. M3 - reserved -- Niro/Leaf 2.0/Outlander - TBD says:

    end of 2018 is fair; cutting it in 45 days is draconian.

    by 2019 many players and nearly mainstream; no reason to subsidize anymore.

  5. SparkEV says:

    “So far, only General Motors has said publicly that it will fight to keep the credit”

    No doubt, GM would suffer greatly if the tax credit is removed. But I think Leaf would suffer far more, yet not a peep from Nissan?

    Frankly, every low tax Republican should be behind the effort to keep the bill that reduce one’s taxes. It’s not like they’re going to lower the taxes in other areas if this went away.

    1. WadeTyhon says:

      Actually, Nissan has recently released a statement as well.

      “We support continuing measures that help encourage greater adoption of EVs given the benefits they can provide, such as lowering vehicle emissions and reducing America’s dependency on foreign energy sources.”

      But they haven’t specifically said they will lobby congress the way GM has.

    2. scott franco says:

      Most republicans don’t support using taxes to modify behavior and shift money from one taxpayer to another, AKA income redistribution.

      I say “most” because there are a lot of Republican representatives who flunked economics just as you did.

      1. SparkEV says:

        If you think getting rid of the tax credit will magically reduce income redistribution, you flunked common sense. They will tax you the same and give the tax credit to someone else. But of course, lots of republitards like yourself believe in the magic of paying more taxes.

      2. Nick says:

        If ICE vehicles paid their fair share for the environmental havoc they caused, no incentives would be needed for EVs. EVs would be all anyone could afford.

    3. EVShopper says:

      GM is nearly at the limit. Will begin phaseout probably Q1 or Q2 of 2018. So no, I don’t think they will suffer that greatly, but the sudden yank does mess with their business plans.

      Others like Ford, Chrysler, Mazda, Subaru, Kia-Hyundai, have far more to lose.

    4. mx says:

      Come on, “low tax Republican”?
      That means you get 1% of the benefit, and the actual 1% gets 99% of the benefit.

  6. Ron M says:

    Trump is trying to get subsides for Coal and Nuclear, while the rest of the world loves renewables

    1. Mister G says:

      Yes government cheese for the fossil fuel industry to create jobs LOL

  7. Mister G says:

    How about eliminating all fossil fuel production deductions? It won’t happen because fossil fuel industry is dependent on government cheese LOL

    1. (⌐■_■) Trollnonymous says:

      ……or feather off Petrol/OPEC welfare subsidies.

  8. Tom says:

    My 2 cents.
    1. GM has the most to lose. Tesla is not in a class of vehicle that it matters much. Neither is BMW. Nissan Leaf is cheap enough it’ll still sell. Prius Prime isn’t much of a jump in price. Chevy is a bit pricey without much halo.
    2. How about a $20/barrel import tax on oil. Will drive the price of oil up a bit while increasing fracking/profits of oil, plus if we are going to burn oil anyway, ours is multiple times cleaner than something from another country…if you don’t believe me just try going to a place like Kuwait. Use the money to fund the rebate program. We are nearly self sufficient already anyway. Most of our oil gets imported from Canada. Exempt them if you must.
    3. I know people hate this but limit it to US built vehicles (Trump loves that stuff), under $50,000 in price (yes I said it), and make it automatic at the purchase not a function of income and tax returns. Bolt, Leaf, and M3 (lower end ones) would still count.
    4. Since I’ve allocated a source of funding, extend it to 500,000 vehicles and a much more gradual slope over 5 years. Any manufacturer that hasn’t sold at least X by end of 2018 not eligible.

    Discuss

    1. john doe says:

      Fracking is really bad for the environment. Ground water is polluted, and also it used a lot of water and chemicals.
      These are long term damages.. Talking many generations.

      1. Spoonman. says:

        1. it really isn’t damaging most of the time
        2. fracking is usually for natural gas, not oil

        1. mx says:

          No. It is. That’s why they Rescinded the Clean Water Act for frackers. You really need to do your research. There’s toxic waste in fracking lubricant.

          1. Big Solar says:

            Yes, many very very bad chemicals that they dont even have to disclose to the public

          2. Spoonman. says:

            Sure, if the stuff got out of the well and into otherwise potable aquifers it would be bad, but it generally doesn’t.

            Fracking is on balance good because it’s killing coal. Not as good as leaving all the fossil fuels in the ground, but the best realistic option right now.

    2. Murrysville EV says:

      Anyone making an EV under say $40k stands to lose big if the subsidy disappears, and that includes Tesla. In a few years, Tesla will not be known as the ‘car for the rich’, because Model 3 sales will dwarf the sales of Model S and X.

      It’s all sort of moot anyway, as GM, Nissan, and Tesla will all hit the 200k volume limit soon enough.

  9. Tom says:

    Oh and Jay says ‘every 6 to 9 months’ in this thread. It’s been 10 months. Tesla is likely a crapshoot but at least a table of where all the manufacturers are at would be nice. And add Kia/Hyundai to the chart. Are they considered the same company for purposes of this rebate? I suppose FCA too.
    https://insideevs.com/us-federal-7500-ev-credit-expiry-date-by-automaker-estimates/

    1. (⌐■_■) Trollnonymous says:

      As a buyer in 2020, I’m pretty much screwed. But I will be buying a TM3 anyway.

  10. God/Bacardi says:

    It’s somewhat surprising you don’t have more power companies trying to save this…

  11. OCRyan says:

    I say convert the tax credit to pull from a central fund, say $7.5B, equivalent to one-million vehicles at full credit.

    All manufacturers pull from the same pool come January 1, 2018. When the pool reaches zero it’s over for everybody.

    Let the market choose the “winner” of the tax credit race.

    1. Chaz Smith says:

      I really like this idea, but might try to include a bit of a taper instead of an abrupt end. I might reduce the break to $5k to save some for the fund and give folks replacing a gas car with a used EV a credit, maybe $1500 for full electric and $750 to $1000 for a plug-in hybrid. Just a bit of a nudge to do the right thing can go along way.

      1. Asak says:

        Yes, it should be one pool but also taper. First half of pool, full credit. Next 25% 3750 (will last as long as the first half). Last 25% 1725, or alternatively just keep the $3750 until depleted.

        There are very obvious ways to improve the credit. The problem is those trying to do away with the credit aren’t interested in improving it, they just want to cut the legs out from under EVs. Even in terms of tax expenditures, this credit is basically a rounding error.

  12. Mark.ca says:

    My idea of a fair ev credit implementation is a dynamic tax/credit. Tax gassers and send the money to evs this way no deficit is created. Right now we are at 1% evs and 99% gassers. Tax the gassers $100-200 per sale and give each ev credit a third of its value or cap it at $15-20K. As the % change, adjust the gasser tax slightly higher so the ev credits would keep pace but slightly go lower over time. Of course the car manufacturers will fight this to the death…

    1. Chaz Smith says:

      Great idea. Unfortunately I think it will take a much more progressive body politic than we currently have in the US. But it’s worth proposing and supporting as much as possible.

  13. Someone out there says:

    The credit will soon start to run out anyway for the big EV manufacturers so it doesn’t matter much. A year from now Tesla GM and Nissan will only have reduced credit

  14. JeremyK says:

    The fact that they were even considering repeal of the creidt, p!ssed me off enough to go out and buy a Bolt a year early. Seriously. Proud owner of a 2017 Premier, as of Saturday.

    1. WadeTyhon says:

      Wow, well congrats! I remember you saying on the forum that you were going to wait. You’re gonna love the Bolt.

      Even if the tax credit remains (I think it will) the 2018 Bolt is basically identical to the 2017. So you aren’t missing out by getting it earlier than planned. And better to be safe than sorry on the Tax credit!

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