U.S. Automaker CEOs Urge Congress to Lift EV Tax Credit Cap
GM and Tesla have already hit their federal EV tax credit cap. Ford and Toyota are soon to follow.
General Motors Co, Ford Motor Company, Chrysler-parent, Stellantis, and Toyota Motor North America on Monday urged Congress to lift a cap on the $7,500 electric vehicle tax credit, citing higher costs to produce EVs, according to Reuters.
The companies’ CEOs – GM’s Mary Barra, Ford’s Jim Farley, Stellantis’ Carlos Tavares and Toyota North America CEO Tetsuo Ogawa — said in the joint letter to congressional leaders that they have pledged to invest over $170 billion through 2030 to bolster development, production and sale of electric vehicles.
The current $7,500 tax credit phases out after a manufacturer reaches a cumulative total of 200,000 electric vehicles (BEVs) or plug-in hybrid electric vehicles (PHEV) sold. Both GM and Tesla have already hit the cap and are no longer eligible for the consumer tax credits.
Toyota said in April it expects to hit the cap by the end of 2022. Ford sold nearly 160,000 electric vehicles through the end of 2021, and could hit the cap this year.
“We ask that the per-(automaker) cap be removed, with a sunset date set for a time when the EV market is more mature,” the automakers said in the letter.
The letter comes amid growing concerns among auto industry executives that the window is closing for U.S. Congress to extend federal electric vehicle tax credits given the prospect that Republicans may retake control of one or both houses of Congress next year.
Last week, Ford Executive Chairman, Bill Ford made an unannounced trip to Capitol Hill to make the case for extending the tax credit.
In April, Senator Joe Manchin (D-WV), a key Democrat, questioned the need to extend electric vehicle tax credits in the face of strong consumer demand and Chinese production of battery components.
“There’s a waiting list for EVs right now with the fuel price at $4. But they still want us to throw $5,000 or $7,000 or $12,000 credit to buy electric vehicles. It makes no sense to me whatsoever,” Manchin said. “When we can’t produce enough product for the people that want it and we’re still going to pay them to take it — it’s absolutely ludicrous in my mind.”
Last year, several Democrats in Congress, along with President Joe Biden, proposed boosting EV tax credits to up to $12,500, including a $4,500 incentive for union-made, U.S. assembled vehicles. Manchin and Toyota Motor North America, at the time, opposed the union-only incentive.
Biden also backed a 30% credit for commercial electric vehicles, a $4,000 used EV tax credit, and making the credit refundable at the point of sale.
He also called for phasing out credits for EVs manufactured outside the United States, sparking furious opposition from Canada and other car-producing countries.
Recent economic pressures and supply chain constraints are increasing the cost of manufacturing electrified vehicles, which is prompting many automakers to pass the price increases on to consumer.
Source: Reuters
