GOP tax reform bill would end the $7500 EV tax credit (and other tax related grousing and grumbling)

[villarrr]

I can't see how the tax credit survives if tax reform is passed. The bill is going through the Senate's reconciliation process(51 vote minimum vs typical 60) which requires the change to be deficit neutral after ten years. What this means is that every available avenue to fund the cuts in the corporate tax, lowering the top bracket to 35% and eliminating the estate tax must be pursued. Net net, upper middle taxpayers will have to fund through a tax increase. With some very unpopular ideas being discussed (e.g. 401K contribution cap to $2K, elimination of state tax deduction), I can't see how EV credit survives. That is why car production being shifted from 2017 to 2018 is bumming me out, as I don't expect the tax change to be retroactive to 2017.

 

[MorrisonHiker]

The flat $7500 didn’t make sense in the first place, it should have been a percentage with a cap. I did take advantage of it a couple times just because it was offered and I could. After the last 8 years of reckless spending I hope now they rethink everything but passing common sense reforms are difficult with the opposition to ending any handout.

It's not a flat $7500. The credit is based on the battery capacity of the vehicle:

For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.

 

[ItsNotAboutTheMoney]

I can't see how the tax credit survives if tax reform is passed. The bill is going through the Senate's reconciliation process(51 vote minimum vs typical 60) which requires the change to be deficit neutral after ten years. What this means is that every available avenue to fund the cuts in the corporate tax, lowering the top bracket to 35% and eliminating the estate tax must be pursued. Net net, upper middle taxpayers will have to fund through a tax increase. With some very unpopular ideas being discussed (e.g. 401K contribution cap to $2K, elimination of state tax deduction), I can't see how EV credit survives. That is why car production being shifted from 2017 to 2018 is bumming me out, as I don't expect the tax change to be retroactive to 2017.

Eliminating the sales tax deduction could add revenue of up to _$500B_ _per year_.
Eliminating the mortgage interest deduction could add revenue of up to _$80B_ _per year_.
Elimination of the PEV tax credit could add tax revenue of up to _$15B_ _total_.

The PEV tax credit is chump change. Stick a 12/31/2019 end date on it and they can claim savings, while keeping the benefits.

 

[Sunshine State]

It's not a flat $7500. The credit is based on the battery capacity of the vehicle:

For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.

I understand it is not flat, it was a bad choice of words but for the purpose of most EV’s it is a flat amount. It should have been tied to the value of the car because it is now a very large percentage of a cheaper car, hence then having a cap to limit the discount on an expensive car. After Fed and State incentives some cheap EV’s were practically given away in some states, not a good system.

 

[jbcarioca]

I understand it is not flat, it was a bad choice of words but for the purpose of most EV’s it is a flat amount. It should have been tied to the value of the car because it is now a very large percentage of a cheaper car, hence then having a cap to limit the discount on an expensive car. After Fed and State incentives some cheap EV’s were practically given away in some states, not a good system.

Please look at the present system in detail. In practice the cheaper cars often have disproportionate benefit because;
- they are generally driven more than are more expensive ones,
- the cheaper ones more frequently replace more heavily polluting vehicles
-the cheaper ones tend to be in categories for which the price advantage is disproportionately influential.

Frankly I think a Leaf or Bolt should have much more incentive than does any Tesla, or future Jaguar, BMW or Mercedes. I think it is good policy to 'practically give away' the cheap, locally intensive BEV's.

 

[LCR1]

Isn't it germany that limits the EV credit based on price of the car and/or income of the person?

 

[kwest2]

Bloomberg reporting the House plan eliminates the credit immediately.

 

[ItsNotAboutTheMoney]

Bloomberg reporting the House plan eliminates the credit immediately.

Link?

I see this article from today (Electric Cars From Tesla and GM May Start Losing Their Tax Credits) from today that says it's being considered, but I can't find anything more explicit.

 

[nagypite]

Link?

I see this article from today (Electric Cars From Tesla and GM May Start Losing Their Tax Credits) from today that says it's being considered, but I can't find anything more explicit.

Tesla Drops After Republican Says Tax Bill Will Repeal Electric Car Credits

 

[k3vtap]

Electric vehicle tax credit expected to be chopped

 

[run-the-joules]

Cancel, all of you. CANCEL.

 

[WhiskySTL]

And from Electrek... Electric vehicle $7,500 tax credit expected to go away with new House tax bill, says congressman

 

[d21mike]

Isn't it germany that limits the EV credit based on price of the car and/or income of the person?

California $2500 EV Credit is restricted based on income of the person.

 

[Snow Drift]

Repealed as of Dec 31, 2017: https://waysandmeansforms.house.gov/uploadedfiles/tax_cuts_and_jobs_act_section_by_section.pdf

Provision: Under the provision...the credit for plug-in electric drive motor vehicles would be repealed. The provision repealing qualified plug-in electric drive motor vehicles would be effective for vehicles placed in service for tax years beginning after 2017.

 

[MorrisonHiker]

Repealed as of Dec 31, 2017: https://waysandmeansforms.house.gov/uploadedfiles/tax_cuts_and_jobs_act_section_by_section.pdf

That would be bad for future deliveries after 2017 but would still allow anyone to claim the tax credit for cars delivered in 2017.

 

[WhiskySTL]

That would be bad for future deliveries after 2017 but would still allow anyone to claim the tax credit for cars delivered in 2017.

Which means... few to no (non-employee) Model 3s... where it will hurt the most.

And if you want it on an S or X, you'd better get moving.

 

[ElecFan]

What a coincidence. Just as Tesla suffers from M3 problems, bang... suddenly there's the tax credit repeal. 'Who is trying to kill the electric car?'

 

[T34ME]

What a coincidence. Just as Tesla suffers from M3 problems, bang... suddenly there's the tax credit repeal. 'Who is trying to kill the electric car?'

The oil industry spent a lot of money to elect the political climate we see now. They would love to see EV incentives and compliance cars go away, so would the legacy automakers.

Badabing!

 

[insaneoctane]

Ironically without the typical Tesla production delays, I might have gotten my M3 loaded. Now I won't be able to justify the LR which pushes out my delivery date significantly and, unfortunately, has me having to reconsider my options. Maybe Tesla will have to be my next next car. I can't help but think that this might be more common than you expect. Additionally even if I could wait, it would still result in less margin for Tesla. Sad day for me

 

[gregincal]

Repealed as of Dec 31, 2017: https://waysandmeansforms.house.gov/uploadedfiles/tax_cuts_and_jobs_act_section_by_section.pdf

If it passes, which is very far from certain. If it does pass, it would actually make me consider waiting for the AWD.