4 Automakers Call on U.S. Government to Lift $7,500 EV Tax Credit Cap

  • Ford, GM, Stellantis and Toyota have all signed a letter asking the federal government to remove the cap on consumer incentives to purchase an electric vehicle, which are currently limited to 200,000 vehicles per automaker.
  • The four companies say the number of credits should be increased as the pandemic and supply chain issues have driven up prices, potentially preventing customers from being able to afford a new electric vehicle.
  • GM and Tesla are the only automakers to hit the threshold so far, but Ford and Toyota could hit the limit this year, Reuters noted.

    Four major automakers are calling on the U.S. government to expand the $7,500 federal tax credit for electric vehicles, citing rising prices and economic turmoil as reasons to allow more than 200,000 qualifying sales per company. Ford, GM, Stellantis and Toyota North America sent a letter to Congress, first reported by Reuters, signed by the respective CEOs requesting the extension. The letter has not been made public.

    When the U.S. federal electric vehicle tax credit was passed in 2008 under President Bush, the message was that the 200,000 vehicle limit would give companies selling their first electric vehicles a price cushion to help them compete. compared to gasoline cars. Once a company sold 200,000, it was thought, it would have achieved some kind of economies of scale and thus be able to lower its prices. This plan works, in some cases. GM, for example, ran out of credits in early 2019 and recently announced pricing for the 2023 Bolt EV and Bolt EUV that was about $6,000 less than the 2022 models.

    But it’s now 2022, and the auto industry is calling on the government to rethink that 200,000 limit. The reasons lie in the quirky world around us. “Recent economic pressures and supply chain constraints are increasing the cost of manufacturing electrified vehicles, which, in turn, is putting pressure on prices for consumers,” the CEOs wrote in the letter.

    Overall, the automakers are essentially asking for more time, saying they’ve collectively committed to spending $170 billion through 2030 to make electric vehicles a reality in the United States and want credit for tax grows in order to attract more customers.

    Ford, Toyota on the verge

    The four automakers are at quite different stages of hitting the 200,000-vehicle-sold limit. GM, as noted, has already adopted it. GM and Tesla are the only automakers to hit the limit so far. But they risk being joined by others, and soon. We don’t know when, since automakers don’t have to release sales figures for eligible electric vehicles, but based on company filings and outside calculations, Ford and Toyota are expected to hit the mark later this year. year, Reuters said, with Stellantis taking the rear. .

    Beyond simply lifting the cap on the number of eligible sales per automaker, previous ideas to expand federal incentives for electric vehicles have included continuing credits until electric vehicles reach a share threshold of predetermined market for a predetermined duration (so, for example, the credits could end once EVs make up 25% of new cars sold for six quarters, or something like that).

    During discussions of potential changes to federal incentives for electric vehicles during negotiations on some of President Biden’s infrastructure and Build Back Better plans, a number of ideas were floated. One would offer credits for used electric vehicle purchases, another would change the tax credit to a point-of-sale rebate, and yet another would increase the maximum tax credit amount from $7,500 to 12 $500. Some of these ideas have been proposed before, such as when President Obama tried to turn credits into dealer discounts a decade ago.

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