Don't punish Tesla and GM for leading the EV charge

Tesla and General Motors took on significant risk by getting ahead of the industry with electrified vehicles. They shouldn't be penalized for being first.

Federal tax credits meant to jump-start the market for electric vehicles and plug-in hybrids begin to phase out three to six months after a manufacturer logs its 200,000th sale of eligible vehicles in the U.S.

Tesla is on the verge of hitting the limit, which is an arbitrary number chosen based on forecasts that have proved far too optimistic. GM will likely reach that threshold by early next year, but other automakers are all at least several years away.

When the program was created under the George W. Bush administration and expanded under President Barack Obama, it was assumed that the EV market would be strong enough to no longer need such incentives by the time the credits were used up. Low gasoline prices are among the reasons that hasn't happened.

Without the tax credits, which are worth up to $7,500, the Chevrolet Bolt will have a sizable disadvantage against EVs that Ford and Toyota plan to roll out starting in 2020. It's ironic that the creator of this price disparity is GM's former majority owner, the federal government.

Tesla is not expected to feel the loss of the credits as much as GM because many of Tesla's vehicles are more expensive and bought by wealthier individuals, whereas GM specifically designed the Bolt to be affordable for a broader population.

Some people argue that the government should not be spending tax dollars to subsidize vehicle purchases, especially when many early adopters of plug-ins have six-figure incomes. But the program is already in place, and suddenly ending the credits for all manufacturers, after they invested billions of dollars on vehicle and infrastructure development, would ice an already chilly market for EVs. That also would hurt suppliers to the vehicles, among others, and delay development of the market even more.

Congress can create a level playing field without disrupting the market or even adding costs to the program by eliminating the 200,000 sales cap for each manufacturer and instead setting a universal end date that applies to everyone. Such an approach would reward rather than punish aggressive investments in EVs and account for what we know now about the market for these vehicles, not what we thought a decade ago might happen.