Dive Brief:

  • A bipartisan group of lawmakers has introduced a measure to extend the federal tax credit for electric vehicle (EV) purchases, citing the need to reduce emissions and continue to support development of the emerging technology and clean energy economy.
  • The current $7,500 tax credit begins to phase out as individual manufacturers sell 200,000 vehicles. So far, only Tesla and General Motors have maxed out their credits, but this legislation would give buyers of an additional 400,000 vehicles per manufacturer a chance at significant savings.
  • The Drive America Forward Act would also extend the hydrogen fuel cell credit for ten years, through 2028. The measure has broad support from clean energy and environmental advocates, as well as vehicle manufacturers.

Dive Insight:

Supporters of the new legislation have 60 organizations behind them and lawmakers from both sides of the aisle.

If the tax credit extension does go through, it would be a major boon to the nascent EV industry, which is widely seen as a crucial step in reducing emissions and meeting environmental goals.

The new legislation would allow purchasers of an additional 400,000 vehicles per manufacturer to be eligible for a $7,000 tax credit. And consumers will be able to receive the full credit through the calendar quarter after the 600,000th vehicle is sold, after which the credit will halve before being phased out entirely after six months.

The original $7,500 tax credit would remain in place for the first 200,000 units a manufacturer sells.

The primary sponsors of the bill are U.S. Sens. Lamar Alexander, R-Tenn.; Gary Peters, D-Mich.; Susan Collins, R-Maine; Debbie Stabenow, D-Mich.; and Rep. Dan Kildee, D-Mich.

In a statement with lawmakers, Ford President of Global Operations Joe Hinrichs said the bill will help the company to grow its electric vehicle portfolio. The company is investing $11 billion in electrified vehicles through 2022, he added.

“Expanding the existing framework gives our U.S. plants the ability to produce smarter, fuel-efficient vehicles for years to come,” Hinrichs said. “It also ensures that American manufacturers can stay competitive in this new automotive era.”

The Alliance to Save Energy issued a statement following the bill’s introduction, noting electrified transportation is “still not yet a mature market” and calling on Congress to “step up and pass an update of the electric vehicle tax credit.”

“Study after study has found that tax incentives are working to make them accessible to more Americans and encourage their sales,” said ASE President Jason Hartke. “We’re really starting to see the emergence of an electric vehicle economy across the country.”

Other groups supporting the measure Include: Advanced Energy Economy, the  Alliance of Automobile Manufacturers, the Edison Electric Institute, Electrify America and a host of vehicle manufacturers and environmental groups.

Both General Motors and Tesla, the only two companies to have maxed out the credit by selling 200,000 vehicles, support the measure.

Asked how the measure could help the company, Tesla pointed to a statement from the EV Drive Coalition, of which it is a member: “The American auto industry has made great strides in delivering cost-competitive EVs that benefit consumers, our environment, and our economy – the Stabenow-Alexander proposal is the next logical step to capitalize on our efforts to deliver global dominance in this critical industry.”