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Hints of EV tax credit expansion boost GM, Tesla
Tesla shares rose almost 1% and GM shares .2% on a recent Reuters report that a bipartisan proposal, expected to be attached to tax legislation within the next few months, would expand the existing EV tax credit by 400,000 vehicles per manufacturer.
GM and Tesla have been lobbying Congress for more than a year to extend or expand the EV tax credit. Senators Debbie Stabenow (D-MI), Gary Peters (D-MI), Lamar Alexander (R-TN), Susan Collins (R-ME) and Representative Dan Kildee (D-MI) sponsored the bill.
According to a Reuters report, the provision would give a boost to Tesla and GM before the existing credit comes to an end for them. Currently, the USD 7,500 EV tax credit, which allows taxpayers to deduct part of the cost of buying an electric car, phases out over 15 months once an automaker hits 200,000 cumulative EV sales. GM saw its tax credit cut to USD 3,750 on April 1 and Tesla’s to the same amount on Jan. 1. In October, GM’s credit will sink to USD 1,875 and will completely disappear by April 2020. Tesla’s current credit falls to USD 1,875 in July and expires at the end of this year.
The newly proposed, “Driving America Forward Act” would offer each automaker a USD 7,000 tax credit for an additional 400,000 vehicles on top of the existing 200,000 vehicles eligible for USD 7,500 tax credits. Additionally, the phase-out schedule would shorten to nine months. The bill is backed by major automakers including GM, Tesla, Toyota Motor Corp, Ford Motor Co, Fiat Chrysler Automobiles NV, Honda Motor Co, BMW AG, Nissan Motor Co, Volkswagen AG, utilities, and environmental groups, like Sierra Club.
But opposition looms. Not only is the Trump administration not in favor of extending the credit, in March, the White House proposed an immediate elimination of the original USD 7,500 tax credit, saying that it would save the U.S. government USD 2.5 billion over a decade.
According to Reuters, GM President Mark Reuss said in a statement, “the EV tax credit provides customers with a proven incentive as we work to establish the U.S. as a leader in electrification.”
Sierra Club Exec. Director Michael Brune said, “as we build and grow the clean energy economy, we must continue to invest in tackling the sector that generates the most pollution: transportation.”
