WASHINGTON — Automakers are scrambling to defend the electric vehicle tax credit after House Republicans last week proposed eliminating it to help pay for their broader package of tax cuts.
Lobbyists here quickly huddled to figure out how to save the tax credit, which the industry views as critical to promoting commercial adoption of electric vehicle technology.
"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," GM said in a statement.
Industry officials had understood that all tax deductions and credits — including the one for EVs championed by President Barack Obama — might be on the table for elimination as House Republicans developed their long-awaited tax plan. Senate Republicans are developing their own plan to overhaul the tax code.
Technology advances, greater economies of scale and government regulations have all helped drive the market closer to the point where automakers say they can profitably make and sell EVs. But the tax credits are viewed as an important bridge to full-scale market acceptance. They are especially critical to the sale of mainstream-brand EVs such as the Chevy Bolt and Nissan Leaf, helping to keep them at a competitive price point and magnify their impact on automakers' fuel economy scores.
"Nissan has made significant investments in the development of market-leading electric vehicles and public charging infrastructure to support EV drivers," Nissan spokesman Brian Brockman said. "We support continuing measures that help encourage greater adoption of EVs given the benefits they can provide such as lowering vehicle emissions and reducing America's dependency on foreign energy sources."
Under current law, consumers who purchase plug-in EVs qualify for a federal tax credit of between $2,500 and $7,500, depending on the size of the vehicle battery. The credit phases out for each automaker when it reaches 200,000 vehicles sold. No manufacturer has reached that figure.
Automakers offer more than 30 models of plug-in hybrid and pure EVs, but they represented only 1 percent of overall sales last year, according to the Alliance of Automobile Manufacturers.
In October, GM announced plans to launch at least 20 new all-electric and hydrogen fuel cell vehicles globally by 2023, including two in the next 18 months, as part of its move to a zero-emission future. Ford is on track to deliver 13 electrified vehicles over the next five years, and officials are betting the market will soon turn toward battery-electric vehicles.
Volkswagen Group plans to introduce 30 new EVs for the Volkswagen and Audi brands by 2025, accounting for a quarter of global sales by that time.
Officials at Volkswagen Group of America were combing through the House tax bill last week and were not able to comment, spokeswoman Jeannine Ginivan said.
The loss of the tax credit could complicate the industry's efforts to meet regulations in California and nine other states that have set targets for sales of zero-emission vehicles, said Wade Newton, spokesman for the Alliance of Automobile Manufacturers. Automakers also would like to see restoration of the tax credit for fuel cell vehicles that expired in 2016, Newton said.
The Electric Drive Transportation Association, which represents automakers, suppliers, energy companies and technology developers, is going to collaborate with members and other stakeholders to make the case that eliminating the tax credit "is pound foolish" and "work with folks in the Senate to make sure they don't follow the same path," President Genevieve Cullen told Automotive News.
"If the whole underpinning of tax reform is to promote jobs, investment and innovation, the credit is doing exactly that," she said, pointing to the fact that more than 215,000 people are employed in EV development.
The association also will make it clear to policymakers that the U.S. could quickly lose its lead in vehicle electrification at a time when China has announced aggressive sales targets for EVs and Europe is encouraging electrification, Cullen said.
