US Congress debates EV subsidy extension

US President Trump would like to see the government subsidies for electric cars abolished immediately, but a new draft law in Congress now aims for an extension of the tax rebates and an increase in the upper limit for the number of subsidised vehicles per manufacturer.

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What’s special: The bill called the “Driving America Forward Act” was introduced by senators from both parties, Democrats and Republicans alike. Specifically, it provides for increasing the current limit of 200,000 subsidized electric cars per manufacturer (which Tesla and GM have already exceeded) by an additional 400,000 vehicles, for which the nationwide tax credit for the purchase of the electric car would then amount to 7,000 US dollars, slightly less than the current 7,500 US dollars. According to initial estimates, the amendment would cost the USA an additional 11.4 billion dollars.

The bill also provides subsidies for fuel cell vehicles to be extended until 2028. It is still difficult to estimate how great the chances are that it will become law. The share prices of Tesla and GM, however, rose in response to the publication of the draft.

Meanwhile, only last month the White House proposed to completely abolish the tax credit for electrified cars. A move that, according to the US government, would result in savings of 2.5 billion dollars within a decade. Led by Senator John Barrasso from Wyoming, whose donors are mostly represented in the fossil fuel industry, the Republicans also initiated a bill in October that would completely abolish tax breaks for electric vehicles and instead impose a special toll on vehicles with alternative drive systems. The topic apparently is a very emotional one.

The issue here is also that California’s state leaders have repeatedly found themselves at odds with Trump, which has served to paint an additional target on the more progressive state’s back. General Motors is based in Detroit, Michigan, which is an area not quite so at odds with the Trump administration on technology and environment, however it seems the lines have already been drawn on this issue. At least here is a strong lobby representing both sides of this argument, so we will likely not have seen the end of this discussion any time soon. Democratic senator Deebie Stabenow reportedly told “a group of automakers at a dinner last week”, that: “We have a cap that’s got to go up…I want to get this done as soon as possible.”

Update 18.12.2019: The bipartisan bill appears to be failing, as the US president has shown “extreme resistance” to the expansion of the tax subsidies for electrified vehicles. While support for the bill has been under fire for some time, as House Republicans failed to eliminate the bill back in 2017, it now seems entirely dead in the water. Conservative criticism of the bill has framed it as benefiting rich Californians, although, given the White House’s attitude towards climate change and the coal and oil industries, this is no surprise. Tax credits for biofuels, as well as wind and solar energy, are still under negotiation, however, so the bill may not be a total loss. Senator Debbie Stabenow from Michigan seemed far more surprised at the opposition to the bill: “I don’t know why the White House would want to stop jobs and the future of the auto industry.”

electrek.co, reuters.com, freep.com, carscoops.com (update), bloomberg.com (update), greencarreports.com (update)