The new House GOP tax bill kills the electric vehicle tax credit

The Republican tax plan passed in the House of Representatives would end the $7,500 electric vehicle tax credit, a program that has spurred a boom in EV sales.

Analysts believe eliminating the tax credit for electric cars could set the EV business back in a big way.

When the state of Georgia removed its $5,000 state tax credit for electric vehicles, a credit that supplemented the federal tax credit, sales of EVs dropped an estimated 90 percent, says Joshua Goldman, a senior policy and legal analyst for the Clean Vehicles Program at the Union of Concerned Scientists.

“The tax credit is arguably the single most important federal policy we have on the books that is supporting the electric vehicle market,” Goldman notes. “[It] has really spurred a lot of innovation, and it has allowed the US to become a leader in electric vehicle deployment and sales. That leadership is really in jeopardy now that the tax credit is on the chopping block in the House tax plan.”

Since the credit was enacted in 2008, the electric vehicle market has grown from just two models to more than 30, Goldman points out, and a number of automakers are now beginning to offer electric vehicles at various price points to appeal to different consumers. A few automakers, including GM and Volvo, have announced plans to move toward an entirely electric or electric-hybrid fleet of vehicles.

The House tax writers tout the elimination of the tax credit as a cost-saving measure which, Goldman says, “doesn't make a lot of sense when you look at how much the credit has actually cost the American public and the benefits that electric vehicles provide for American consumers.”

“In fiscal year 2015, the EV tax credit cost America $580 million dollars,” he explains. “By comparison, the tax credits that we give to the fossil fuel industry cost taxpayers $4.7 billion dollars every year. So, if you look at how much we're spending on electric vehicles versus how much we're subsidizing the oil and gas industry, it's not even close.”

This article is based on an interview that aired on PRI’s Living on Earth with Steve Curwood.