Economy

US House Republicans propose to scrap $7500 electric vehicle credit

US House Republicans propose to scrap $7500 electric vehicle credit”

House Republicans are proposing to eliminate a $7,500 tax credit for electric vehicles that could hurt automakers like General Motors Co, Tesla Inc and Nissan Motor Co that are selling larger numbers of vehicles, according to a summary seen by Reuters. Not to mention these vehicles can't travel as far on a charge as gasoline-powered cars can on a single fillup. Electric auto sales there were growing briskly until the state cut its $5,000 electric vehicle tax credit in June 2015.

Bloomberg notes that eleven states, including California and NY, offer credits and rebates to help drive interest in the new technology, but the larger federal tax credit for electric cars serves as a bigger incentive for Americans to buy them; the credit phases out after a manufacturer sells 200,000 cars. Tesla and Nissan declined to comment. This incentive is put in place to drive sales for EVs so that manufacturers gain the capital needed to grow their electrified divisions, and may also be one of the largest reasons consumers buy electric cars. If the bill passes, that means that electric vehicle buyers will see the tax credit disappear by the end of the year.

Automakers are preparing more electric vehicles to get ahead of the competition, and EV sales mandates in some states only add to the pressure.

Automakers have invested billions in electric vehicles and announced plans to shift significant production to plug-in models.

Former President Barack Obama repeatedly proposed hiking the tax credit for electric vehicles to $10,000 and converting it to a point-of-sale rebate.

GM shares fell 1.2 percent in late trading, while Tesla was down 7 percent after reporting earnings.

Automakers face mandates from California and a dozen other states to produce a rising number of zero-emission vehicles and have said the credits are essential to meeting requirements. For lower-priced vehicles, such as the Tesla Model 3 and Chevy Bolt, a $7,500 tax credit could make up almost a quarter of the vehicle's purchase price.



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