US Automakers Want Congress To End Tax Credit Cap On Electric Vehicles

The American electric vehicle manufacturers are devising means that could help the faster adoption of electric vehicles and seamless growth of the EV sector in the USA at a time when the European and Chinese electric vehicle markets are booming. In a fresh development, Chief Executive Officers of General Motors, Ford Motor, Stellantis and Toyota Motor North America have written a letter to the Congress urging the policymakers to end the tax credit cap on the number of vehicles that are eligible for a tax credit of up to $7,500 by the Federal Government.

The petitioners believe that the lifting of the cap will help enhance consumer adoption of electric cars and trucks. The present tax credit begins to phase out once a company sells 200,000 electric vehicles. The joint letter to the Congress leaders reveals that the top executives of the auto companies want it to ensure that the electric vehicles remain affordable when the production and commodity costs rise.

“Eliminating the cap will incentivize consumer adoption of future electrified options,” the letter states. It also added, “We ask that per cap be removed, with a sunset date set for a time when the EV market is more mature. Recent economic pressure and supply chain constraints are increasing the cost of manufacturing electric vehicles which, in turn, puts pressure on the price to customers.”

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The letter was addressed to Senate Majority Leader Chuck Schumer and Speaker of the House Nancy Pelosi among many others.

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At present, only two players – General Motors and Tesla – exceed the limit of 200,000 vehicle sales that attracts the phasing out of the tax credit system. Many electric vehicle players fear that they are about to reach the 200,000 EVs mark because they are also rolling out many new electric products.

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“The coming years are critical to the growth of the electric vehicle market and as China and the EU continue to invest heavily in electrification, our domestic policies must work to solidify our global leadership in the automotive industry,” the letter holds.

The CEOs have also said that four auto companies have pledged to invest over $170 billion through 2030 to provide a boost to the electric vehicle development, production and sales. They said that this includes near-term investments of more than $20 billion in the United States.

The electric vehicle sales in the USA was 85 per cent more in 2021 than the previous year while the plug-in hybrid electric vehicles sales more than doubled in the same period. The American market is poised for stronger growth in 2022.