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Will Trump Help By Extending the Electric Car Tax Credit?

On Wednesday, a bipartisan group of U.S. lawmakers introduced legislation to extend the electric car tax credits for buyers of hybrid and electric vehicles. 

The Driving America Forward Act looks to expand the electric vehicle tax credit by an additional 400,000 vehicles per manufacturer, giving companies like Tesla and General Motors a boost before the current tax credit comes to an end.  It would also extend the hydrogen fuel cell tax credit through 2028.

But will Trump let it pass?

Current Electric Car Tax Credits in the U.S.

The present law on the books allows automakers to offer tax credits for up to 200,000 electric vehicles per manufacturer, a number which both Tesla and GM have already reached.  After crossing that threshold, the automaker triggers a phase-out period which results in the $7,500 tax credit being gradually reduced to nothing over the course of a year.  Once the tax credits expire, electric vehicle sales tend to plummet, a fate both of these companies predictably want to avoid.

Electric Vehicles and Politics in the U.S.

The bipartisan compromise is a huge step forward in regards to electric car legislation in the U.S.  A coalition led by Tesla, GM, Nissan, and other electric car manufacturers have been lobbying to reform the federal electric car tax credit in order to level the playing field for all automakers since the end of last year, but such lobbying means nothing if it does not lead to changes in the law.   

Republicans and the Trump administration have long been threatening to handicap or end the electric car tax credit, and even at one point proposed a new annual tax for electric vehicles.  In a recent budget proposal, Trump suggested that ending the tax break in 2020 would save the country $2.5 billion over the next decade. 

But Republicans aren’t always pushing in that direction.  Most recently a Republican-backed bill was introduced in Georgia which would reinstate a $2,500 state tax credit towards the purchase of a new plug-in hybrid or fully electric vehicle.  The credit would be limited by a $10 million annual cap, and eventually end in 2023.  It would also include a $500 tax credit for residential charging stations and a $1,500 credit for commercial charging stations. 

And let us not forget that the Republican President George W. Bush signed the original electric vehicle tax credit into law.

Democrats, on the other hand, have previously sought to extend and expand the tax credit, and even completely remove the 200,000 delivery threshold at both a state and federal level. 

It seems as though this new bill could be a boon to the electric car industry, if it is passed.  American electric car automakers are currently at a disadvantage to foreign competitors because of the end of the tax credit, so a continuation would help their bottom line.  But only time will tell if Trump can be convinced that this choice may be best.

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