Transitioning the American consumer from gas-powered to electric vehicles is a massive undertaking. Critical to this task is the federal income tax credit for EVs, which attracts consumers and helps offset the higher costs of electric vehicles. However, because credit eligibility expires when an automaker cumulatively sells over 200,000 EVs, Tesla and General Motors electric cars are currently ineligible for the credit.
Mary Barra, GM's Chief Executive Officer, is urging Congress to reinstate the tax credit to GM and Tesla to continue spurring EV sales. Depending on an EV buyer's situation, the credit is worth up to $7,500 when filing annual income taxes.
According to Barra, GM and Tesla are being punished for their early push in the zero-emissions, electrified vehicle space. "That tax credit of $7,500 is significant in a purchase decision," CEO Barra told CNBC. "We'd like to see that [cap] lifted and let the marketplace decide and not penalize first movers."
Due to strong sales of its Bolt EV and Volt plug-in hybrid electric models, GM reached the 200,000-vehicle limit in 2018. The company extended partial credits to EV buyers through April 2020, but now they are completely unavailable to GM customers.
The decision to extend the credit is critical to General Motors, which has deeply invested in electrification. The automaker plans to release 30 new EVs by 2025 and transition to a fully electric light-duty fleet by 2035. In the first half of 2021 alone, GM has unveiled a new 2022 Chevrolet Bolt EUV, revealed the 2023 Cadillac Lyriq SUV, and shown the upcoming GMC Hummer EV pickup and SUV. GM also announced a new plan for 60,000 charging stations across the U.S.
Meanwhile, other automakers ranging from Audi to Volvo are selling electrified vehicles that are still eligible for the federal income tax credit. As Steve Carlisle, president of GM North America, told Automotive News, every automaker deserves a fair shot at attracting EV consumers. "Given all the potential barriers to adoption and the fact that we need to get moving along that curve, I think incentives in many different forms enter into the conversation," Carlisle said. "A level playing field is a reasonable thing to aspire to."
Barra's plea comes just as Congress considers President Biden's American Jobs Plan. The president is seeking approval for the package, which includes a $174 billion investment to "win the EV market." The Biden administration has earmarked a majority of these funds for rebates and tax incentives. However, the administration has not indicated whether it will roll back the thresholds to benefit automakers like GM and Tesla.