Few things are as damaging to the automotive industry as regulatory uncertainty, which is why the industry is quietly celebrating the fact that the GOP Congress left intact the consumer tax credit of up to $7,500 for the purchase of electric vehicles.
The broader impact of the tax overhaul passed last month may take years to become clear. But given the industry's long-term investment cycles and the precarious state of the EV market, it could have been a big setback for the industry had earlier proposals to wipe out the EV tax credit made it into law.
Politicians and industry leaders will have fundamental disagreements about whether the federal government should favor one form of energy over another to power automobiles, and that debate is worth continuing.
The ultimate resolution should take into account the billions of dollars in auto industry investment that is at stake, as well as the potential to usher in a cleaner, more sustainable way to move people around. It should be part of a transparent, negotiated solution, not tacked onto a rushed and secretly crafted tax bill.
Regardless of their paltry share in the marketplace, EVs represent multibillion-dollar wagers placed by auto executives into a technology that promises — eventually — to reduce harmful greenhouse gas emissions. Those wagers have yet to pay off in full, but that day is getting closer as EV technology evolves, just as gasoline engines have for decades.
Congress was right to let the EV tax credits stand and give these investments a chance to succeed. As they're structured now, the credits expire on their own as EVs become more popular. They're hardly a drain on the Treasury.
But the uncertainty caused by their near legislative death should give pause to any auto executive who would rely on a promise by the government to subsidize a beneficial new technology. Just keep building great innovative vehicles, and know that the government will be there for you — until it isn't.
