Electric cars might soon cost more
Tax plan eliminates credit of up to $7,500.
The House Republican tax plan would ax the tax credit for electric-vehicle buyers, dealing a blow to the ambitions of Tesla and other battery-car makers as they try to give the nascent technology mainstream appeal.
The tax overhaul proposed Thursday would eliminate the tax credit of up to $7,500 that’s currently offered to buyers of vehicles such as the Tesla Model 3, Chevrolet Bolt and Nissan Leaf.
The tax credit is viewed as crucial to propelling technology that’s currently more expensive than comparable internal combustion engine cars.
Proponents of eliminating the incentive say the government shouldn’t pick one technology over another, or should cut most tax credits to simplify the overall code and lower rates.
Genevieve Cullen, president of the Electric Drive Transportation Association, criticized the credit’s proposed elimination.
The association “continues to believe that a reformed tax code should include a robust set of incentives to support the electrification of transportation,” Cullen said in a letter to Rep. Kevin Brady, RTexas, chairman of the Ways and Means Committee.
While most analysts expect electric cars to reach cost parity with traditional vehicles in the coming years, the tax credit’s swift demise could undermine momentum for the technology.
In any event, it’s dismal timing for Silicon Valley’s Tesla, which is currently launching the Model 3, its first mass- market car.
The tax credit represents a 21% effective discount on the Model 3’s starting price of $35,000.
Although the vehicle has encountered production setbacks, Tesla is still hoping to fulfill hundreds of thousands of refundable deposits made by shoppers when the tax credit was still in place. Tesla stock was down 6.8% in afternoon trading Thursday to $299.26. The decline may be largely attributable to consternation over the company’s manufacturing difficulties and the whopping $619 million third-quarter loss the company posted Wednesday.
Tesla declined to comment for this story.
The tax credit’s potential demise is also tough to stomach for General Motors, which has invested heavily in the Bolt, and Nissan, which is about to start selling the redesigned Leaf.
“Tax credits are an important customer benefit that can help accelerate the acceptance of electric vehicles,” GM said in a statement. “Because General Motors believes in an all-electric future, we will work with Congress to explore ways to maintain this incentive.”
A Nissan representative was not immediately available for comment.
To be sure, the plan is far from final. The legislation is subject to negotiation, votes and the president’s signature. The electric car credit could yet survive.