Support for EVs on Capitol Hill does not divide neatly along partisan lines, as a pair of dueling bills in the Senate illustrates. This week, Senator Dean Heller (R-Nevada) proposed legislation that would lift the current cap on EV tax credits.
Under current law, once a particular automaker sells 200,000 EVs, the tax credit will begin to be phased out starting in the following quarter. Tesla passed the 200,000 vehicle milestone in July, and GM expects to hit the threshold by the end of this year.
This arrangement has two perverse effects: in Tesla’s case, it means buyers of the company’s earlier, more expensive vehicles got the tax credit, while buyers of the yet-to-be-delivered base Model 3, who arguably need the incentive more, will not be eligible. Secondly, it means that automakers that delayed their EV programs will now have a competitive advantage over the two companies that took a risk and got into the market early.
Senator Heller’s bill would lift the cap on sales by individual manufacturers, but would phase out the credit for the entire industry in 2022.
Meanwhile, Senator John Barrasso (R-Wyoming), who chairs the Senate Environment and Public Works Committee, wants the government to move in the opposite direction. He recently proposed legislation to end the EV tax credit entirely and impose a new federal tax on EVs.
Senate Democrats are opposed to Barasso’s bill. “Repealing a policy that helps combat climate change is the absolute wrong decision,” said Senator Ron Wyden. Last month, seven Democratic senators introduced legislation that would lift the cap, extend the tax credit for 10 years, and allow buyers to use the credit as a point-of-sale rebate.