Tesla pushing the limits of pro electric car legislation


A new bill has been introduced in the U.S. Congress to remove the 200,000 unit cap on access to the 7,500 dollar tax credit. Tesla is the first carmaker likely to sell “too many” electric cars and be phased out for a year, a rule that is obviously counterproductive. There are other countries too where Tesla has hit a boundary.

In fact, the limit in the USA penalises those carmakers selling the most electric vehicles. This is also the argument Rep. Peter Welch makes in his bill H.R.6274. He not only wants to remove the threshold but also replace the tax credit with a direct rebate.

Different from other plug-in grants in other countries, the U.S. federal tax credit works by deducting 7,500 dollars from your tax at the end of the year, rather than applying the money as a discount when buying an electric car.

Another difference is the aforementioned cap that applies to carmakers and their units sold rather than a deadline or budget allocated to the EV incentive programme.

The legislation would change all that but has yet to go through the Congress and Senate.

Meanwhile, Tesla is expected to hit the 200,000 EV sales threshold this year. This means that in 2019, Tesla buyers will see the credit cut in half for 6 months and then again halved for the second half of the year.

And it is not only on the national level where Tesla may be excluded. Texas offers an incentive on top of the federal tax credit but Tesla cars remain excluded from it. The feud has been ongoing and essentially revolves around Tesla refusing to sell their electric cars through independent dealerships. Direct dealings are forbidden in Texas however and have led to an on-going struggle of Tesla vs Texas. Tesla currently operates gallery-like showrooms there.

Apart from grey areas and loopholes of the legal system, Tesla also faces a disadvantage in markets where incentives depend on the price of a plug-in car. Germany made a case of positioning the Model S in a bracket for example, where the state does not deem it necessary to support somebody able to consider buying a 60,000+ euro electric vehicle. Fair enough.

electrek.co (tax credit), insideevs.com (Texas)


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