Oil companies officially ask Republicans to kill effort to extend electric vehicle tax credit

As some have launched efforts to extend the federal tax credit for electric vehicles in order to accelerate EV adoption in the US, several trade groups representing oil companies are fighting back. 

The American Fuel & Petrochemical Manufacturers, along with several other fossil fuel trade groups, have sent a letter to US Senate Majority Leader Mitch McConnell (R-KY) and House Speaker Paul D. Ryan (R-WI) to kill any effort to revive the federal tax credit.

They wrote (via the Oil and Gas Journal):

“We encourage the House and Senate to build on tax reform and not take a step backward by expanding the EV tax credit this Congress. Even if the new policy has a phaseout year, once it is included as part of tax extenders, it is very likely to be renewed year-by-year.”

The situation around the federal tax credit for EVs is weirder than ever right now.

As Tesla hit the 200,000 delivery threshold to initiate the phase-out, there are two different legislative efforts to change the program.

Last month, a Republican senator introduced a new bill to end the $7,500 federal tax credit for electric cars and tax them even more instead.

But a few days later, another Republican senator proposed a new bill to remove the federal tax credit cap for EVs and expand it to 2022.

Republican Senator Dean Heller, who introduced the pro EV tax credit bill that would see it extended instead of capped, was defeated in the mid-term elections earlier this month.

With those two distinct bills, the Democrats regaining control of the House, and Republicans expanding their majority in the Senate, it’s really unclear what will happen to the EV federal tax credit.

But the fossil fuel industry fears that it could be extended and it is using its political weight with the Republican party to try to stop it.

They wrote in the letter:

“In summary, it is unwise public policy to subsidize a highly inefficient means of [greenhouse gas] reduction that primarily benefits the wealthy, driving up the deficit or forcing taxpayers to make up the difference,”

The American Fuel & Petrochemical Manufacturers counts amongst its members companies like Shell, ExxonMobil, BP and virtually every petroleum company operating in the US.

Electrek’s Take

Oil companies appear to be really concerned about subsidies affecting the US deficit.

Strangely, they are more concerned by the little amount given for electric vehicles than by the massive amount of subsidies that oil and gas companies have been receiving.

It is believed to be around $20 billion per year, which dwarfs the amount allocated for electric vehicles before even accounting for the negative health and environmental impact of those oil companies and the positive impacts of electric vehicles.

As always, we here at Electrek believe a carbon offset would be more efficient than the federal tax credit and it would also remove all the arguments about the wealthy primarily using the tax credit, but no one has the political cajones to put this through Congress.

In the meantime, the federal tax credit for EVs is the best tool we have to accelerate EV adoption. Anyone trying to remove it (without replacing it with something better like a carbon tax) should be truly ashamed of what they are trying to do.