Quantcast
Energy
iStock

The Federal Electric Vehicle Tax Credit Is a Bipartisan Success Story, Which House Republicans Want to Undo

By Ben Jervey

As the House and Senate develop their respective versions of a tax reform bill, the $7,500 federal electric vehicle (EV) tax credit is positioned to be a potential bargaining chip. The House's version of the bill, the "Tax Cuts and Jobs Act," includes a repeal of the EV tax credit. The Senate's newly introduced version, at the moment, doesn't kill the credit.

Current policy calls for an already-scheduled phase out of the credit over the two calendar quarters after each automaker surpasses 200,000 total plug-in vehicle sales. The new House proposal would eliminate the tax credit entirely at the end of this year—only EVs registered on or before Dec. 31 would qualify.


Not only would this repeal slow the acceleration of electric car adoption, it will also hurt our economic, energy security and energy independence goals, and slow progress in bringing affordable and practical electric cars to the mass market. To understand the importance, rationale and benefit of this credit, a short history of the bipartisan legislation is useful.

The Bipartisan Roots of the Electric Vehicle Tax Credits

Regardless of the environmental and human health benefits of displacing gasoline and diesel combustion with plug-in electrics, thoughtful policymakers and legislators from both sides of the aisle have long understood the importance of EVs when it comes to promoting energy independence and security. A decade ago, the Energy Independence and Security Act of 2007, promoted and signed by Republican President George W. Bush, first deployed "incentives for the development of plug-in hybrids." The stated purpose of the act included moving "the United States toward greater energy independence and security" and "to increase the efficiency of products, buildings and vehicles."

One year later, another bill passed with bipartisan support, the Energy Improvement and Extension Act of 2008, to again be signed by President Bush. This version was written to include all types of plug in electric vehicles (both battery only and plug hybrid electrics) that met certain battery size criteria for providing a meaningful all electric range. it created the first non-refundable consumer tax credits for at least the first 250,000 plug-in vehicles sold.

In 2009, in order to make the tax credit accessible to more automakers, many of which had lobbied their concerns that they needed more time to ramp up their electric car programs, the credit was revised to its current form in the The American Recovery and Reinvestment Act of 2009. The only change in the so-called stimulus bill was that the quantity of plug-ins sold before the credit would phase out was set at 200,000 per manufacturer. In other words, the first 200,000 plug-in Chevy vehicles would all be eligible for the credit. Likewise for the first 200,000 Tesla Motors, the first 200,000 plug-in Fords, and so on.

Where Does the Federal EV Tax Credit Stand Now?

Over the past seven years, since the modern era of plug-in electric vehicles commenced with the launch of the Chevy Volt and Nissan Leaf, only a handful of automakers have sold more than 100,000 plug-in electric cars in the U.S. (most notably, Tesla and General Motors) and none have reached the 200,000 threshold for phasing out the credit.

Both GM and Tesla are due to reach the 200,000 car mark within the next year or so, meaning the tax credits for those makes would be phased out relatively soon regardless of any new policy. (Not as soon as the end of this year, but not too long from now.) However, many other automakers have taken longer to get to market, making the continuation of this credit vital to achieving the original policy goals set out by Congress at the end of last decade. For instance, Ford's plug-in F150truck (shown above) has been developed with the expectation of a federal tax credit to support early adopters.

General Motors, with even less to lose than other automakers, responded to news of the newly introduced tax bill statement critically: "Tax credits are an important customer benefit that can help accelerate the acceptance of electric vehicles. Because General Motors believes in an all-electric future, we will work with Congress to explore ways to maintain this incentive."

Beyond energy security and environmental benefits, there would be direct financial and human health impacts of slowing the adoption of EVs. Many of the electric vehicles selling well today are built in the U.S. by American workers. Slowing their sales now will have an immediate negative impact on American companies and workers. "The EV tax credit repeal would cede U.S. leadership in clean vehicles, putting our companies at a competitive disadvantage and threatening jobs while costing drivers more at the pump and increasing pollution," said Luke Tonachel, director of the Natural Resources Defense Council's Clean Vehicles and Fuels Project.

Furthermore, as supporters of the original legislation understood, the electricity that EVs run on is generated in the U.S. from domestic resources. This has real monetary value, not only to utilities and energy producers, but also in potential savings to electric ratepayers, as EV charging practices can better utilize electric system capacity. Jeff Allen, executive director of Forth Mobility, wrote last year of a California study that found that each electric car was worth up to $9,799 to the electric utility and its ratepayers.

Finally, the science is conclusive about the human health benefits of electric vehicles, particularly as they displace urban petroleum (gasoline and diesel) vehicle miles traveled with electric miles. As research published by the Proceedings of the National Academy of Sciences concluded in 2014, "EVs powered by low-emitting electricity from natural gas, wind, water or solar power reduce environmental health impacts by 50 percent or more."

Preservation of the federal EV tax is sound, non-partisan transportation energy policy. For a decade, Republicans and Democrats have agreed on the value and importance of the tax credit. In the grand scheme of tax reform, the credits are a relatively small budget item—a little more than $1.5 billion per manufacturer over the course of more than a decade. Those savings would do little to make up for the $989 billion shortfall that the rest of the tax reform plan would create.

The federal EV tax credit is smart policy that will help ensure the next generation of Americans has greater prosperity, health and opportunity in the coming global marketplace, one that is already wholeheartedly embracing the inevitable transition to vehicle electrification.

This post has been adapted from an article originally posted on KochvsClean.com. Reposted with permission from our media associate DeSmogBlog.

Show Comments ()

EcoWatch Daily Newsletter

Sponsored
Climate
U.S. Army member helps clear debris from Tyndall Air Force Base following Hurricane Michael. U.S. Army

Pentagon: Climate Change is Real and a 'National Security Issue'

The Pentagon released a Congressionally mandated report (pdf) that warns flooding, drought and wildfires and other effects of climate change puts U.S. military bases at risk.

The 22-page analysis states plainly: "The effects of a changing climate are a national security issue with potential impacts to Department of Defense (DoD or the Department) missions, operational plans, and installations."

Keep reading... Show less
Popular
Protesters interrupt the confirmation hearing for Andrew Wheeler on Capitol Hill Jan. 16 in Washington, DC. Chip Somodevilla / Getty Images

5 People Calling Out EPA Acting Head Wheeler for Putting Polluters First

This week, people across the country are joining environmental leaders to speak out against the nomination of former coal lobbyist Andrew Wheeler to lead the the U.S. Environmental Protection Agency (EPA). As Scott Pruitt's hand-picked successor, Wheeler has continued to put polluters over people, most recently by using the last of his agency's funding before it expired in the government shutdown to announce plans to allow power plants to spew toxic mercury and other hazardous pollution into the air.

Keep reading... Show less
Popular
Great white shark. Elias Levy / Flickr / CC BY 2.0

Marine Biologists Raise Flags About Viral Great White Shark Encounter

By now you might have seen Ocean Ramsey's rare and jaw-dropping encounter with a great white shark in waters near Oahu, Hawaii.

Ramsey, a marine biologist, said on the TODAY Show that it was "absolutely breathtaking and heart-melting" to be approached by the massive marine mammal.

Keep reading... Show less
A tree found severed in half in an act of vandalism in Joshua Tree National Park. Gina Ferazzi / Los AngelesTimes / Getty Images

Wall Before Country Takes Mounting Toll on Americans Everywhere

By Rhea Suh

One month on, the longest and most senseless U.S. government shutdown in history is taking a grave and growing toll on the environment and public health.

Food inspectors have been idled or are working without pay, increasing the risk we'll get sick from eating produce, meat and poultry that isn't properly checked. National parks and public wilderness lands are overrun by vandals, overtaken by off-road joyriders, and overflowing with trash. Federal testing of air and water quality, as well as monitoring of pollution levels from factories, incinerators and other sources, is on hold or sharply curtailed. Citizen input on critical environmental issues is being hindered. Vital research and data collection are being sidelined.

Keep reading... Show less
Sponsored
Energy
The W. A. Parish Power Plant, owned by NRG Energy, is one of the largest coal-fired power plants in the U.S. Roy Luck / CC BY 2.0

All Coal-Fired Power Plants in Texas Found Leaking Toxins Into Groundwater

Power plants across Texas are leaching toxins into groundwater, according to new research. A report released this week from the Environmental Integrity Project found that all of the state's 16 coal-fired power plants are leaching contaminants from coal ash into the ground, and almost none of the plants are properly lining their pits to prevent leakage.

Keep reading... Show less
Popular
Martin Luther King, Jr. National Historic Site. NPS

MLK National Park to Re-Open Despite Shutdown, Thanks to Delta

Hats off to Delta Air Lines. The company's charitable arm awarded the National Park Service an $83,500 grant to help reopen the Martin Luther King Jr. National Historical Park in Atlanta from Jan. 19 through Feb. 3 in honor of Dr. King's legacy.

The Atlanta-based airline was inspired to act after learning that some of the park's sites, including Dr. King's birth home, Ebenezer Baptist Church, Fire Station No. 6 and the visitor center, were closed due to the partial government shutdown, now on its 28th day, according to LinkedIn post from Delta Air Lines CEO Ed Bastian.

Keep reading... Show less
Sponsored
Food
Chris So / Toronto Star / Getty Images

Nebraska Lawmakers Want to Ban the Word 'Meat' From Vegetarian Substitutes

By Dan Nosowitz

Nebraska is the country's second-leading producer of beef, and is in the top ten of pork producers.

Keep reading... Show less
Insights/Opinion
A northern cardinal and finch in the snow. Mark Moschell / Flickr

Is Winter Miserable for Wildlife?

By Bridget B. Baker

While the weather outside may indeed get frightful this winter, a parka, knit hat, wool socks, insulated boots and maybe a roaring fire make things bearable for people who live in cold climates. But what about all the wildlife out there? Won't they be freezing?

Anyone who's walked their dog when temperatures are frigid knows that canines will shiver and favor a cold paw—which partly explains the boom in the pet clothing industry. But chipmunks and cardinals don't get fashionable coats or booties.

Keep reading... Show less
Sponsored

mail-copy

The best of EcoWatch, right in your inbox. Sign up for our email newsletter!