Tesla, GM Establish Coalition to Extend Electric Vehicle Tax Credit


When the federal government rolled out a program in 2010 to help give electric vehicle (EV) manufacturers a leg up, it was intended as a temporary measure that most everyone assumed would wrap up at a later date, when the EV market was a little more stable and mature.

This program specified that buyers of full EV or plug-in hybrids were eligible to receive a federal tax credit of up to $7,500. The goal was to help offset purchases in a market where new technology and a small scale translated to higher prices. The catch was, consumers could use the credit when buying eligible vehicles from carmakers until those carmakers sold 200,000 EV, at which point the credit would start to wind down.

Fast-forward a few years, and EV-exclusive Tesla has hit the 200,000 mark, with GM is close behind it, which means both companies are now facing a looming deadline — after which their EV will cost thousands more than competitors' offerings. In response, the companies are taking action against what they call an “arbitrary” credit deadline.

GM, Tesla, and 13 other companies have formed a coalition to revise the rules of the EV tax credit. The EV Drive Coalition says it is “working to ensure a flourishing, mature, cost-competitive U.S. EV market,” and to do so, must level the playing field by reforming the tax credit or, more specifically, extending it beyond the allotted 200,000 vehicle cap.

Nissan is the only other automaker to join GM and Tesla in this initiative, and it’s no coincidence that Nissan is likely to be the third company to hit their target. However, other industry stakeholders are on board as well. These include electric charging network company Volta, EV bus-maker Proterra, and a handful of regional clean fuels organizations. Absent are the many automakers that would benefit, at least in the short term, from being able to offer large tax credits as incentives when Tesla and GM can’t — companies like Volkswagen and Hyundai, both of which are still an estimated five to seven years away from hitting their limits.

But the EV Drive Coalition says the current tax credit rules effectively penalize “market leaders." Instead, the coalition supports a ruling that “allows the credit to sunset once the nascent EV industry has had additional time to mature and grow,” according to the group's website — vague terminology that probably means "Let’s keep this thing going for as long as we can."

Jeep’s Worst-Kept Secret Ready to DeliverNext Story »