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New Republican bill could remove federal tax credit cap for EVs after Tesla hits 200k

These are confusing times for the US’ federal tax credit for electric vehicles as three different bills have been introduced to the legislation to change the law.

The latest would be good news for Tesla and GM as it would remove the 200,000 car delivery cap, which the former has reached and the latter is about to reach, and replace it with a deadline.

As we previously reported, Democrats introduced a new bill in Congress in July to remove the delivery limit for the federal tax credit and replace it with a time limit.

The effort wasn’t taken seriously since the US Congress is controlled by the Republican Party.

Last week, a Republican Senator introduced a different bill to end the $7,500 federal tax credit for electric cars altogether and even tax them more instead.

Now in another twist, Republican senator Senator Dean Heller reportedly proposed another piece of legislation that’s closer to what the Democrats were proposing.

Reuters reported today:

“Under current law, once a manufacturer hits 200,000 EVs sold, the tax credit phases out starting in the following quarter. Heller’s bill lifts the individual manufacturer cap but would phase out the credit for the entire industry in 2022.”

The Democrats were proposing a ten-year period instead of the delivery cap. Therefore, the new bill represents an interesting compromise.

Tesla and GM would be the two automakers most positively affected by the change since the tax credit is set to phase out for their buyers within the next year under the current law.

Both companies have reportedly lobbied for the bill or at least lifting the cap.

In the Senate, Heller represents Nevada, which is a state where Tesla has some significant political influence since establishing its Gigafactory 1 there.

Considering all the current proposed legislation around the electric vehicle tax credit and the upcoming mid-term elections, it’s unclear what is going to happen.

Electrek’s Take

It’s really confusing stuff. Three different pieces of proposed legislation with all different changes to the federal tax credit all being presented within a few months and ahead of very important elections.

Republicans appear to be split on the subject and the Democrats appear to be for lifting the cap.

While phasing out the tax credit by 2022 will get automakers off their press releasing backsides and actually sell some EVs, the market will likely crash when the incentive is lifted.

I want to be optimistic here and believe that the cap will be lifted since I think it will contribute to accelerating EV adoption in the US, which is falling behind many other markets, but I somehow think the status quo is the most likely outcome.

As always, we here at Elecrrek believe a carbon offset is the answer but no one has the political cajones to put this through Congress.

What do you think? Let us know in the comment section below.

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