U.S. Senator Moves To Scrap $7500 Federal EV Incentive, Tax Them More Instead!

A Republican senator in the United States has introduced a bill that could spell the end of the $7500 federal tax credit for electric vehicles.

The bill, introduced this week by Wyoming Senator John Barrasso, wants to terminate the EV credit and to “provide for a Federal Highway user fee on alternative fuel vehicles” instead, something that would constitute a total reversal of federal policy.

Congress’ website has yet to list all the details about the bill, but Electrek claims that the bill is already being backed by some Democrats. Given that both the Senate and the Congress are controlled by Republicans, there’s a strong chance this proposal might actually become a law in the near future.

As it stands, the tax credit is awarded for each EV and plug-in vehicle a manufacturer delivers in the United States. Once said manufacturer deliveries more than 200,000 qualifying vehicles, the tax credit is reduced to $3750 for a period of six months. After those six months, the tax credits falls to $1875 and is put in place for a further six months. After that, it is dropped entirely. Tesla recently became the first carmaker to have its tax credit drop to $3750.

Green Car Congress reports that the bill has been referred to the Senate Committee on Finance.

While electric vehicles are becoming cheaper and more popular, sales are still helped by the federal tax credit. For example, in Denmark, sales of electric vehicles fell drastically from almost 5000 in 2015 to around 700 in 2017 after the government phased out a number of generous subsidies. These changes crippled sales of Tesla and the Model S. Something similar happened in Hong Kong, when a tax break was slashed and Tesla’s local sales fell to zero.

Oh, and one more thing: “Oil and Gas” are, according to Open Secrets, Senator Barrasso’s second-biggest donor after “Securities and Investment”. Feel free to draw your own conclusions…