Quantcast

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

Energy
iStock

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.

EcoWatch Daily Newsletter

By George Citroner

The Office of Disease Prevention and Health Promotion and the World Health Organization currently recommend either 150 minutes of moderate intensity exercise (walking, gardening, doing household chores) or 75 minutes of vigorous aerobic exercise (running, cycling, swimming) every week.

But there's little research looking at the benefits, if any, of exercising less than the 75 minute minimum.

Read More Show Less
Mary Daly, president of the San Francisco Federal Reserve Bank, poses for a photograph. Nick Otto / Washington Post / Getty Images

It seems the reality of the climate crisis is too much for the Federal Reserve to ignore anymore.

Read More Show Less
Sponsored

Passengers trying to reach Berlin's Tegel Airport on Sunday were hit with delays after police blocked roads and enacted tighter security controls in response to a climate protest.

Read More Show Less
A military police officer in Charlotte, North Carolina, pets Rosco, a post-traumatic stress disorder companion animal certified to accompany him, on Jan. 11, 2014. North Carolina National Guard

For 21 years, Doug Distaso served his country in the United States Air Force.

He commanded joint aviation, maintenance, and support personnel globally and served as a primary legislative affairs lead for two U.S. Special Operations Command leaders.

But after an Air Force plane accident left him with a traumatic brain injury, post-traumatic stress disorder (PTSD), and chronic pain, Distaso was placed on more than a dozen prescription medications by doctors at the U.S. Department of Veterans Affairs (VA).

Read More Show Less
(L) Selma Three Stone Engagement Ring. (R) The Greener Diamond Farm Project. MiaDonna

By Bailey Hopp

If you had to choose a diamond for your engagement ring from below or above the ground, which would you pick … and why would you pick it? This is the main question consumers are facing when picking out their diamond engagement ring today. With a dramatic increase in demand for conflict-free lab-grown diamonds, the diamond industry is shifting right before our eyes.

Read More Show Less
Sponsored
Preliminary tests of the bubble barrier have shown it to be capable of ushering 80 percent of the canal's plastic waste to its banks. The Great Bubble Barrier / YouTube screenshot

The scourge of plastic waste that washes up on once-pristine beaches and finds its way into the middle of the ocean often starts on land, is dumped in rivers and canals, and gets carried out to sea. At the current rate, marine plastic is predicted to outweigh all the fish in the seas by 2050, according to Silicon Canals.

Read More Show Less
Man stands on stage at Fort Leonard Wood in the U.S. Brett Sayles / Pexels

Wilson "Woody" Powell served in the Air Force during the Korean war. But in the decades since, he's become staunchly anti-war.

Read More Show Less
Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez at a rally in Council Bluffs, Iowa on Nov. 8. Matt Johnson / CC BY 2.0

By Julia Conley

Joined by Rep. Alexandria Ocasio-Cortez Friday night, Sen. Bernie Sanders held the largest rally of any 2020 Democratic presidential candidate to date in Iowa, drawing more than 2,400 people to Iowa Western Community College in Council Bluffs.

Read More Show Less