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Compromise Tax Bill Keeps Electric Car Credits

Compromise Tax Bill Keeps Electric Car Credits

House and Senate negotiators have managed to keep tax credits for electric vehicles plugged in to their compromise tax bill. The up to $7,500 tax credit was not part of the House’s original tax proposal, but was in the Senate’s version of the bill.

During the last week the two legislative bodies have been working in conference to merge their respective tax bills. During the merging process, the Senate’s take on both electric car credits and wind production credits allegedly found their way into the final bill. That said, it is worth noting the text of the final bill is not slated to be released until late Friday as tweaks are still being made to it.

According to Bloomberg sources, the electric vehicle tax credit will remain unchanged under the $1.5 trillion tax bill. These means the first 200,000 qualifying electric vehicles an automaker sells will be subject to a $7,500 federal tax credit. After the first 200,000, the amount of the tax credit will dwindle as sales volume increases, ultimately hitting zero.

Advocates of the tax credit–including automakers–have argued that repealing it would cause a large drop in demand for the electric vehicles.

So far no automaker has hit the 200,000 mark. Tesla is the closest to hitting it, having sold over 122,000 Model S and Model X products in total. Assuming the company’s Model 3 hits full production in early 2018, the company will likely run out of the tax credits in 2018.

Congressional analysts estimate removing the electric vehicle tax credit would save approximately $200 million over the next decade.


About Nick Saporito

AutoVerdict Senior Editor Nick Saporito began writing about cars at age 13. Nick ran a couple of automotive enthusiast sites for several years, before taking some time off to focus on his career and education. By day he's a marketing executive in the telecom world and by night he hangs out here at AV. You'll find him focusing on tech, design and the industry's future.
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