Congress: Lifeline for EV incentive

The Federal Tax Incentive for the purchase of a new electric vehicle ($2,500 - $7,500, based on battery capacity) has been a well received measure of the Obama administration - it was part of a goal to reach one million electric vehicles in the US streets by 2015. While the goal of one million EVs has not yet been reached (largely due to lower-than-expected gasoline prices), the Federal Tax Incentive is approaching its end - at least for some companies. A new bill in Congress is trying to revive it.

My legislation will make electric vehicles and their charging stations more affordable, while saving Vermonters money at the gas pump and reducing their environmental footprint.
— Rep. Peter Welch - Source:

Now, Rep. Peter Welch (D-VT) has introduced a new bill in Congress, co-sponsored by Rep. Jared Huffman (D-CA) and Rep. Jacky Rosen (D-NV). According to, the bill aims to remove the 200,000 EVs limitation imposed on each manufacturer, and instead, replace it with a time period of 10 years, during which any EV purchaser will receive the incentive. The bill will largely benefit two US car manufacturers - Tesla and GM, which are fast approaching the 200,000 limitation. Most importantly, though, the new bill will change the form of the incentive to a direct rebate, instead of a tax credit and it will expand the application of the incentive to purchases of EV charging stations.

Around the end of 2017, during the yearly tax bill discussions, there were fears that the incentive may be scrapped altogether. Fortunately, the incentive was saved, after a consortium of 50 companies, led by CALSTART signed a letter urging the Congress to retain it. It thus remains to be seen whether such an EV-friendly bill will have much luck on the floor.

The Federal Tax Incentive today: 

The way the Federal Tax Incentive was structured in 2011 allowed each EV manufacturer to take advantage of the incentive for the first 200,000 EVs sold. Tesla, who is the largest seller of EVs in the US (Tesla S being the number 1 seller in the United States EV category), will soon be rolling its 200,000th EV out of the factory. According to the existing framework, the full incentive will continue to be paid for one more quarter, after the quarter during which production reaches 200,000 vehicles. Then, the phase out period kicks in; during it, the tax credit of $2,500-$7,500 will drop to $1,250-$3,750 for 6 months, followed by a drop to $625-$1,875 for another 6 months. After the phase out period runs out, no federal tax incentive will be paid to purchasers of EVs. 


Andrew Kyprianides