Will the Republican Plan to Zap the EV Tax Credit Kill Electric Cars?

The $7500 federal electric car tax credit is arguably the main reason to purchase an electric vehicle. The Republican tax reform bill that is currently in Congress threatens to do away with this federal credit. Without the credit, research suggests the demand for these hybrid and electric vehicles will drop significantly. To be sure, some automakers such as Tesla argue that no federal credit is a good thing as it levels the playing field.

Key Takeaways:

  • The Plug-In Electric Drive Vehicle Credit, as the IRS calls it, predates the rise of today’s electric cars such as the Nissan Leaf and the Tesla Model S.
  • Removing the federal tax credit would make it virtually impossible to meet these [plug-in sales] requirements, and it will put at risk the billions of dollars that automakers have already invested in developing EV technology,” said Navigant research director John Gartner
  • Eliminating the fuel cell and EV tax credits will hamper progress toward getting these very clean and energy-efficient vehicles on the road.

“The elimination of the EV tax credit might not be a mortal wound for California’s electric-vehicle market, which has reached 5 percent of total passenger-vehicle sales, but it could prove a challenging headwind for selling enough EVs in those other states.”