Lawmakers in Washington have a decision to make: Expand consumer subsidies on battery-electric vehicles, or let the current law run its course and allow the technology and hundreds of billions of dollars of investments to live — or die — unassisted by taxpayers.
We believe that while electric vehicles must ultimately stand on their own, battery technology and charging infrastructure are not yet sufficiently developed to support a widespread transition of the U.S. fleet. And while previously enacted tax subsidies helped to spawn the technology and give it legitimacy in the eyes of U.S. consumers, any subsequent taxpayer assistance must be better directed to assist those of lesser means to make the leap to EVs, instead of underwriting the second or third vehicles of the wealthy.
The existing subsidies were established in 2008 and expanded in 2009 to their current levels: a tax credit of up to $7,500 on qualifying vehicles. In 2009, the program — initially limited to just 250,000 vehicles for the entire industry — was expanded to 200,000 per manufacturer.
Today, Tesla and General Motors have fully exhausted federal tax credits for their customers. This quarter, Toyota is expected to become the third automaker to reach the 200,000-vehicle threshold, triggering a yearlong phase-out period. Nissan and Ford are close behind while other automakers are further back, according to those who try to track the status of the rebates.
Some lawmakers remain vehemently opposed to any subsidies for electric vehicles, while others feel that the environmental benefit warrants further support from taxpayers. Compromise can be found in the middle ground.
For example, a taxpayer should qualify for only one purchase subsidy, not multiple. There should be income limitations on who qualifies, as well as price limitations or phase-outs to ensure that taxpayer assistance is available only for lower-priced vehicles. And any help should be available immediately at purchase, to lower the cost of borrowing.
Finally, whatever Congress decides should have a sunset provision.
This industry is on its way to an electrified future, and it may need further help from taxpayers to reach its targets. But electric vehicles eventually will have to stand on their own.