The Republican House tax plan proposed this week includes eliminating the current credit of up to $7,500 for electric vehicle buyers, USA Today reported. Automakers and industry analysts warn that nixing the EV tax incentive could have a negative effect on the entire electric vehicle industry.
The tax credit applies to vehicles that include the Nissan Leaf, Chevy Volt, and Tesla Model 3. Expensive batteries make the price tags for EVs steeper than their gas-powered counterparts. Reuters points out that GM’s electric Chevrolet Bolt starts around $30,000 with the tax credit, but would be $37,500 without it.
“While most analysts expect electric cars to reach cost parity with traditional vehicles in the coming years, the tax credit’s swift demise could undermine momentum for the technology,” USA Today business reporter Nathan Bomey wrote.
The Republicans’ plan comes on the heels of Dyson Ltd.’s expected entry into the EV market. In late September, British billionaire inventor James Dyson said his company would be investing more than $2.5 billion in vehicles and batteries. A concept EV from the company could hit the road by 2020, but Dyson told Bloomberg Technology that “Tesla has $5 billion, I don’t have that kind of money.” He’s hoping the UK government will subsidize the installation of residential rapid EV chargers.
Tesla Takes a Hit
Losing the US tax credit for customers would be a heavy blow to Tesla. The company’s earnings report this week showed a $671 million loss for the quarter — its largest ever — stemming in great part from the enormous investment required to ramp up Model 3 production, Green Auto Market reported. Still, quarterly revenue was $3 billion.
In addition to electric vehicles, Tesla also makes the Powerpack, a well-known scalable battery storage system for utility and commercial applications. Camborne Energy Storage deployed a Powerpack with a 500 kilowatt-hour capacity last year in the UK. The system, located next to a solar farm, was credited with keeping the lights on.
In response to the devastation from Hurricane Maria, Tesla CEO Elon Musk talked with Puerto Rico Governor Ricardo Rosselló about deploying utility-scale battery systems. Musk tweeted that he planned to delay the introduction of Tesla’s new semi-truck and divert resources to focus on increasing battery production for Puerto Rico. On October 24, Musk tweeted photos of a solar and storage project that went live at Hospital del Niño, calling it the “first of many” similar projects.
Losing the tax credit may affect companies that have been installing EV charging stations on their properties for employees and visitors. Adding such stations has helped businesses large and small close in on their sustainability goals. Such a feature can also create a competitive advantage by helping to attract prospective employees.
Over the summer, the Scion Vineyard and Winery in Rutherglen, Australia, installed a Tesla charging station as part of a larger effort to combat rising infrastructure costs. Earlier this fall, Kim Matsoukas, senior manager of sustainability and social responsibility for Vans told Environmental Leader that the shoe brand’s new headquarters in California has 30 EV charging stations, up from four at the old location.
More recently, Charles Marshall, airport engineering manager for Atlanta International Airport told Energy Manager Today about installing 300 EV chargers.
“Quite a few passengers have purchased EVs,” Marshall said. “The mayor set out the goal that we would be one of the greenest airports in the world, and this is one of the manifestations of that.”
USA Today’s Bomey cautioned that the House Republican tax plan is far from final because the legislation is subject to negotiation, votes, and the president’s signature. “The electric car credit could yet survive,” he wrote.