WASHINGTON -- Lawmakers opposed to tax credits for electric vehicles are again trying to eliminate federal subsidies for buyers of alternative-power vehicles and force them to contribute more for highway infrastructure.
Bills filed Wednesday in the U.S. House and Senate to terminate the $7,500 EV tax credit have little chance of passing, especially in a Democratic-controlled House, but renew a debate about the state of the EV market and government's role in shifting demand to cleaner forms of transportation.
The tax credit is designed to defray the cost of EVs that are more expensive than similarly sized traditional vehicles. Opponents say the program disproportionately helps wealthy car buyers.
"Rural America's taxpayers shouldn't be footing the bill for others to drive high-end electric vehicles," Rep. Jason Smith, R-Mo., said in a statement about the bill he authored. "The Electric Vehicle Tax Credit has benefited the wealthy at the expense of everyday Americans just trying to get by. It's time to end this wasteful subsidy and help rebuild our nation's infrastructure by ensuring every driver contributes to improving the roads we all use."
Despite the concerns over lost gas tax revenue, several states charge EV owners higher registration fees and/or other surcharges in lieu of those taxes. In Michigan, for example, EVs face 20 percent higher registration fees plus a $135 annual surcharge. For hybrids, the surcharge is $47.
The Senate version of the Fairness for Every Driver Act was introduced by Sen. John Barrasso, R-Wyo., chairman of the Environment and Public Works Committee. He first made the proposal in October, with Smith following in December.
Cost savings
The Manhattan Institute, a conservative free-market think tank, estimates that ending the federal EV subsidy will save taxpayers about $20 billion over the next decade.
In addition to repealing the EV tax credit, the bills would impose a highway user fee on alternative-fuel vehicles because they are immune from gasoline taxes and ensure the money collected on a user's tax return goes into the Highway Trust Fund.
In a Fox News op-ed Tuesday, Barrasso argued that the auto industry no longer needs the subsidies as evidenced by auto companies' plans to churn out dozens of electric models in the next few years.
"Never before has the electric-car consumer had so many choices. Taxpayers, on the other hand, don't have any choice," he wrote. "Every time one of these cars sells, the U.S. taxpayer must help pay for it."
Eight of 10 EV tax credits go to households earning at least $100,000 he added.
Under a 2009 law, the $7,500 credit is available to consumers until each automaker sells 200,000 EVs. General Motors, which sells the battery-electric Chevrolet Bolt, reached the threshold at the end of 2018. That means the tax credit will be halved in April, then halved again in October for six months. The tax credit is scheduled to expire in April 2020.
Established market
An Audi Super Bowl commercial that cost an estimated $5 million and advertised that one-third of the brand's cars will be electric by 2025 is evidence "this market is firmly established," Barrasso said on the Senate floor.
There is general agreement within the auto industry, which has invested billions of dollars developing zero-emission vehicles, that the credits are important to growing EV market share. To what extent the tax credit should be adjusted, however, differs by automaker.
The industry is also encouraging states and utilities to expand financial incentives, build charging infrastructure and offer parking and high-occupancy vehicle privileges.
Last fall, GM, Tesla Inc., Nissan Motor Co. and others launched a coalition that seeks to get Congress to extend the tax credit. Tesla reached the limit last summer.
GM and Tesla have also lobbied to lift the cap, but GM's announcement of potential plant closings to free up money for developing electric and self-driving vehicles angered many lawmakers who said the nation's largest automaker didn't deserve more federal help.
A congressional report last November estimates the cost of the EV tax credit at $7.5 billion between fiscal years 2018-22.
