The federal tax credit for electric vehicle purchases could see a significant boost under a new legislative push on Capitol Hill, Reuters reports. The credit stands at $7,500 per car for every manufacturer for the first 200,000 vehicles produced and then shrinks to $3,750 for the next six months before being halved again. A bipartisan group of lawmakers is sponsoring a bill that proposes expanding the tax credit by giving manufacturers $7,000 for an additional 400,000 vehicles, months after the tax credit for Tesla and GM vehicles had begun to shrink upon hitting the 200,000 vehicle mark. Reuters notes that the bill is sponsored by Republican Sens. Susan Collins and Lamar Alexander, along with Democratic Sens. Debbie Stabenow and Gary Peters.
The EV tax credit has been a thorn in Tesla's side for a few months after falling to $3,750 in January of this year, prompting a series of price cuts and other incentives across the model range. GM is not far behind, having seen its $7,500 credit for consumers cut in half this month. Meanwhile, buyers of EVs from Porsche, Audi, Mercedes-Benz and Volkswagen, just now beginning to roll out electric vehicles, still have years of the full $7,500 tax credit to enjoy. In effect, the automakers that introduce EVs later will have an advantage in the marketplace over the next several years before they hit the 200,000-unit mark, while automakers like Tesla and GM have used up most of this cushion by now. A large group of German automakers getting ready to field EVs in the next couple of years will be able to offer this incentive to their buyers, while other automakers will not.
If the full $7,500 tax credit did not seem like a double-edged sword for automakers before, it does now.
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