Raise Federal EV Tax Credit To $10,000, Says Vermont Congressman

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The key to kick-starting electric sales in this country is to raise the federal tax-credit for said purchase up to $10,000, up from the $7,500 where it stands currently, so says Vermont Congressman Peter Welch anyway.

The main reason for the increase, according to Welch, is that it would make EVs more affordable to middle-class Americans — reasoning that you can’t really argue with. Not effectively anyway. 🙂

Image Credit: Tesla Motors

Another reason, though, one which he considers to be nearly as important, is that such an increase in EV adoption would help to limit vehicle emissions, and thusly greenhouse gases — something that Welch says he feels strongly about. Easy to see why — the state took quite a beating (especially economically) recently, courtesy of Hurricane Irene. And this sort of thing is predicted to become quite a bit more common in coming years via climate change.

MSN Autos provides more info:

Welch said he planned to introduce the legislation as the Electric Vehicle Act when he returns to Washington, where he has an EV tax credit ally in the White House. In its most recent budget, the White House also proposed raising the federal tax incentive for purchasing an EV from $7,500 to $10,000. But the larger tax break wouldn’t apply to vehicles with a sales price of more than $45,000. For luxury EVs such as the Tesla Model S and Cadillac ELR that are over that limit, the tax credit would be capped at $7,500.

According to Karen Glitman of the Vermont Energy Investment Corporation, a nonprofit consulting group that promotes efficient energy, there’s something else important to note — drivers in Vermont spent around $1.1 billion on gasoline and diesel in 2010. A huge amount of money — why send that out of state?

“We need to keep that money with Vermonters and keep it working in Vermont rather than sending it overseas, for the most part,” Glitman noted.

A very good point, and one that is not often brought up when discussing EVs.

Of course there are other ways to stimulate EV uptake as well — it need not only be through direct economic subsidies. Vermont’s neighbor Connecticut recently began a rather different approach — aiming to incentivize EV sales at the dealership-level.

It’s hard to say which approach would be more effective, generally speaking. Perhaps it would depend entirely on the specific market/environment? So much of an incentive’s success comes down to the specifics of the market, as we recently discussed with the release of the International Council on Clean Transportation’s (ICCT) newest report.

If I had to venture a guess, though, I’d say higher tax credits would likely be quite effective for the Vermont market, and the US market in general.

Image Credit: Tesla Motors

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James Ayre

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

James Ayre has 4830 posts and counting. See all posts by James Ayre

68 thoughts on “Raise Federal EV Tax Credit To $10,000, Says Vermont Congressman

  • Bully for Vermont!
    10,000 is great
    One problem is that there are many people that do not have that level of federal tax. Many middle class customers would benefit from a direct payment off sticker.

    • Yes, I think simply giving a $7,500 cash rebate like CA does could be more effective than a $10,000 tax break.

  • Of course the other way to help this to gradually raise tax on gasoline, incentives for clean domestically fueled cars, penalties for dirty cars fueled by declining polluting resource often supplied by despots

    • Yeah, gas taxes are absurdly low in the US, which is why our roads and bridges are crumbling.

    • The gas tax hasn’t been raised in 21 years! That is ridiculous. And yet people still whine about it. But it is so politically unpopular here because we are a bunch of self-entitled children.

    • It would be a mistake to raise gas taxes as a means of making gas an unpopular fuel.

      • Raising taxes 1 cent per gallon per year will be enough to cover a 10k cash rebate instead of a 7.5k tax break and people will mostly be non the wiser or won’t care about 1 cent per gallon.
        And I think compagnies like Telsa shouldn’t be cut from the higher tax breaks, Tesla will change the industry for the better and should get all the support it can get, if that means giving Cadillac a higher tax break too, so be it.

        • Keep thinking that. People will notice, particularly the ones that can’t get a car loan to buy one of those electric cars. But heck, if they don’t notice, the rest of us certainly will notice a gas tax that goes up at a rate of 1 cent/year….especially when we know that it’s only going up so that the upper-middle-crust can get a break on their toys.
          I have little problem giving manufacturers a tax break, particularly those that make products the average American can afford. So what does a “base” Tesla cost, these days?

          • Just thinking outloud.
            Like gas prices haven’t gone up more then 1 cent a year in the last, what, 50 years?
            Since when is a new product not bought by the rich first? Look at the cellphone. 😛

          • There’s a big difference between the market driving prices and a tax going up at a rate of 1 cent/year just so the, to use your word, “rich” could get a $10k rebate for buying a toy. If they’re really rich, then why do they need the rebate?

          • it’s an incentive…
            to promote the market, to get the prices down, so other people can afford it too and buy it with this or another incentives, which will cause the price to drop even more, which will cause even more people to be able to afford it, etc..
            That’s how new potential markets are build.

          • it’s a plan to get nonusers to finance those that can afford the toys like the tesla. I know we should be used to such things… after all there was the so caller “Hummer” credit some years ago.

            Ford’s entry is already at a price ($35K,) that is affordable but we allow a $7500 credit for it, anyway. That borders on theft as far as I’m concerned.

          • How many people do you know that can afford a 35k car?!?!?! (unless you know a lot of uppies and riche people)
            We need incentives to get people to buy a new car while there old one is still good, not when there car is 20 years old.
            Most EVs are less then 50k, Tesla has only 1 model above 100k I believe, as does BMW and GM, but we need most of them to be around 20k to be affordable for the general public, to start the EV boom, I think that’s where the sparky-sparky-boom price is.

          • “How many people do you know that can afford a 35k car?!?!?!

            I don’t know about “afford,” but judging from the numbers of Denalis, BMW’s, Mercedes, Caddies, etc…, that I see on the road, I would judge that there’s a fair number that can easily buy a $35k+ car. I know that even though I’m middle class, I wouldn’t have a problem buying a $35k car. So why should I help you buy your toy? You sure as heck didn’t help me buy mine, after all. As for the “general public,” in another post you made this morning, you indicate that you’re really only considering urban areas because that’s where the people are – that’s another excellent reason that this rural country boy shouldn’t help you buy your toy.

          • As for the “general public,” in another post you made this morning, you indicate that you’re really only considering urban areas because that’s where the people are – that’s another excellent reason that this rural country boy shouldn’t help you buy your toy.

            Because railroads benefit all people even if they don’t go to every town?

            Oh, wait…

            Sorry, I got confused with a different century’s “impractical toy”.

          • Indeed, you are confused. “Urban” doesn’t include “every town,” didn’t you know? If, as a tax payer, I’m to subsidize urban travel then I’d want to subsidize the form of travel that is most open to those that can’t afford to keep a car of any kind. In those cases, commuter trains, subways, and buses still offer more bang for the buck than giving individuals $10k tax credits to buy a car.
            Trains ceased being “toys” a long time ago. Trains still find use as freight haulers country wide and as commuter vehicles in urban settings. Trains fell out of favor as a means of “town-to-town” travel as car and air travel became more practical. Train travel from town-to-town is really just a “curiosity” for most of us outside our nation’s urban centers.
            Please feel free to extend your argument to horses and carriages, if you want.

          • then don’t buy EV, I’m not selling you one, just giving you the reasons of why rebates and TCs help

          • You’re wanting me to help pay more for one bought in the US. Or do you imagine tax credits and rebates don’t cost anything?

          • So, I ask again, why should I subsidize a toy?

          • You subsidize? I’m glad your not a decission maker if you think cars are toys

      • adjusted for inflation, gas prices are far below what they were decades ago, because we have no political will and the public doesn’t understand that public infrastructure and services don’t simply materialize out of thin air.

        • The infrastructure will materialize out of nowhere when the technology becomes practical in most of the country. Raising taxes because the “public doesn’t understand” is a fool’s errand – the public understands more than you think.

          • How the fuck are cars supposed to “become practical” without tax-funded roads?

          • Cars are already practical. The discussion is about raising taxes so those that buy electric cars can get a $10,000 tax credit. Try to keep up.

          • What do you think gas taxes pay for?

          • Road infrastructure? Is that the right answer? Why? What do you think gas taxes pay for? Perhaps Tesla rebates?

          • And how much road infrastructure can a country buy when the gas tax hasn’t keep up with inflation for 20 years?

          • You’re not keeping up. This particular sub-thread started because it was suggested that raising the gas tax would be a good way to force fossil fueled cars off the road and, thus, make it easier for EVs to become the norm.
            I noted that the EV’s technology is not yet practical for most of the country and, thus, the need for the EV specific infrastructure does not yet exist on a broad scale because there is no real demand for such infrastructure. When the need for charging stations becomes great enough then private business will take care of supplying that infrastructure and the government will find a way to make certain EVs pay their share of road use taxes.
            Your argument, while interesting, is another argument that has little to do with EVs, forcing fossil fueled cars off the road, or funding $10,000 tax credits so people don’t have to spend as much money to buy their EV toys. Try to keep up.

          • When it comes to charging stations, you’ve got it partly wrong.

            EV producers are building free charging stations with renewables all across the country allready, to make the country more accessible for EVs.

            The networks are growing so fast, you can find a charging stations every 50 miles on most highways within a few years, I call that practical for most of the country.
            What will need to happen in the future, in which you are right, is that compagnies need to build charging stations on there parkinglots for imployees and customers, to help divert peak solar production during the day time, when only a few people are at home using there solar power. But that’s a future grid problem and a whole other issue.

          • So I looked at Teslas’ site and found a map of charging stations and a little diagram about taking a road trip. You start the trip sometime in the morning and get a half-charge while you eat lunch. OK, so that basically means that i make a late start on my road trip around 9am so as to time my needing a charge to lunch time. I eat lunch and leave with the batteries half charged and get to travel another hour and a half before I have to have another “lunch.” Not very practical, especially since there isn’t a string of charging stations near me. Just for grins, though, I picked out one of the charging centers tesla has on its map and find it only has 8 charging stations. Of course, in real life, my first EV would be more along the lines of the Ford Focus and it doesn’t have a range anywhere near that of a tesla. From my standpoint, EVs are only practical technology in urban areas. That’s not most of the county.

          • I didn’t say the networks are finished.
            Also, good thing most people live in urban areas, how many people travel more then 60miles a day on average?

          • Actually, there are a number of level 2 charging stations available, but they aren’t very practical from a time standpoint.
            I note that most of the country is rural. There’s really no good reason we bumpkins should finance toys for urban dwellers. If are to finance urban transportation systems then let us support public transportation that’s affordable to those that can’t afford to keep a car in the city.

          • “The networks are growing so fast, you can find a charging stations every 50 miles on most highways within a few years, I call that practical for most of the country.”
            So there’s no need for a tax credit for what, apparently, is an already practical transportation option for all. 😉

          • We will talk again in 2018 and see how things are going then

          • In 2018, EVs will not be practical for most of the country. If there was a chance of general acceptance of EVs by that time, then you wouldn’t feel the need to be asking for $10K credits to buy your toys. CNG has a better chance of country-wide adoption.

          • If natural gas has a chance of success then you wouldn’t need those subsidies.

          • CNG vehicles don’t get a federal tax credit or rebate of which I’m aware. CNG seems to be catching on with “fleet” vehicles, but even now, most tend to be dual-fuel arrangements. A similar situation exists for electric cars as evidenced by the growingly popular hybrids that effectively work around the lack of fast charging technology.

          • Natural gas production gets a lot of subsidies.

          • People who buy CNG cars and trucks don’t get federal tax credits or rebates. As I understand things, most hybrids are no longer eligible for a federal credit unless they can be “plugged in.”
            You’ll have to be more specific about NG production subsidies if you really want to talk about them. I’ll offer that my observation of the Haynesville shale production in my area of the world is that subsidies apparently aren’t enough to make it worthwhile to take the gas out of the ground. T-Boone somewhat agrees with me. 😉

          • why are you constantly saying “your toys” like I have 1 (or more)
            Besides you are of your bonkers if your reading articles on this site and don’t think EVs are becoming generally accepted in 2014 and will definetly be accepted and replacing ICE cars in 2018.
            We have a saying here in Holland: things go one ear in and out the other, you are a perfect example what that means, when it comes to rebates and TCs
            CNG has a better chance and LNG is a bridge fuel :S

          • I call them “toys” because they are not yet practical in my part of the world. If you only have one, then then you’ve already gotten your US tax credit when you filed your US income taxes… right? Unless you live and work in my country, however, you really have no standing in our domestic matters.

            Besides you are of your bonkers if your reading articles on this site and don’t think EVs are becoming generally accepted in 2014 and will definetly be accepted and replacing ICE cars in 2018.

            If EVs have already reached that level of acceptance then, clearly, there is no longer any need for government incentives of any kind. Let the private sector handle the infrastructure.
            I considered a dual fuel CNG pickup last year, but ended up getting one that burned gasoline only. The trouble I ran into was that the nearest CNG station was far enough away that I would have used most of my CNG range in the process of traveling back and forth to the nearest CNG station.

          • Like I asked you before, what is average miles per day that is being drivin in the US per car? How many miles can a average EV drive today? Then you know if they are practical, they don’t have to be practical for everyone, just enough to get the ball rolling.
            there is a difference between acceptance and needing and being able to buy a new EV that is practical (someone who needs a truck for work and 250 miles a day can’t buy an EV yet, but housewives and officeworkers who drive less then 50 miles a day can)
            Like I told you, the private sector is handling infrastructure by building a network and helping people charge at home.
            And yes I believe in every kind of incentive to buy a product that will make the world a better place.

          • Like I asked you before, what is average miles per day that is being drivin in the US per car?

            Wrong question. What determines whether a vehicle is practical for most that can only afford one vehicle is not average daily miles driven, but our regular exceptions to that average. Allow me to offer an example.
            When I take a brief look at EVs, it appears to me that the Ford Focus EV might come close to meeting my minimum size requirements (as opposed to something like the Smart Car EV.) The Focus also seems quite affordable(, the $7,000 tax credit its purchasers can get is outrageous.) The Focus EV has a range of 76 miles between charges. That’s fine for my normal daily activities. However, my son lives 30 or so miles away. My wife and I regularly invite him to eat out with us at a steak house that is 38 miles from our house. That’s a 76 mile round trip minimum, more if my wife decides to go shopping as part of the outing. Oops.
            I can work anywhere I have access to the internet. My wife, however, travels 20 or so miles a day in her work. Again, the Focus EV is usable, though she would prefer something larger. But, again, it’s the regular exceptions to the normal routine that define whether an EV is practical. Four or more times a month, my wife’s work requires her to travel 80+ miles a day. Moreover, her work regularly requires her to make trips that are 700+ miles round trip. An EV just isn’t practical from my family’s vantage point. Moreover, the cost of an EV isn’t the problem.
            It’s also worth pointing out that the limited range of an EV doesn’t allow much in the way of emergency trips. I’ll offer as an example, my mother-in-law’s recent emergency stay in hospital. The round trip to the hospital is 70 miles away. The actually emergency trip to my wife and I made occurred in early evening at a time that would have guaranteed the Focus would not have a full charge when we needed to make the trip. That EV with a 76 mile range would have failed us for such a trip.
            I wonder if you understand how spread out the US is? Americans do quite a bit of driving as part of their normal routines, even those that work in the larger cities. We Americans are not very European in our sensibilities.
            It’s not a question of “getting the ball rolling.” The ball is rolling quite well. One can get a inexpensive EV, such as the Focus, or one can get a luxury EV.

          • Then in your case I suggest a hybrid.
            You can do your daily trips electrical and use CE part for the longer trips.

            Or, if you can afford it, which a lot of middle class families can and do nowadays, by an EV for daily trips and primary destinations and a second car for longer trips or secondary destinations.

            But still I think there are enough Americans that can go EV and when prices have dropped enough (preferably without incentives, I give you that) and range has been increased enough (if there are no charging stations on road,which I doubt in the future) everybody can go EV.

            EV and storage technology is improving and price is dropping so fast, I think Obama’s goal of 54MPG of an average car sold in 2025 can easily be reached, it does take incentives temporarily, but in the long run it will only benefit everyone.

            For example: over the years, till the incentives are gone, maybe a couple 100 of your tax dollars might be used for incentives for EVS (keep in mind there are over 200m Americans, incentive costs aren’t that much for EVs, FF get a lot more).
            Those couple 100 will probably save you a couple of 1000 when you buy your next car, I’m shure by then you can buy an EV that is practical for your family, which will be a lot cheaper because of the, among other things, the incentives. Even if you don’t go EV by then, cars will be a lot more efficient on average and there will be so many EVs, that not only will the US be a net exporter of oil, demand will probably be lower then production so the price of oil could drop. (oil price has been relatively stable in US, I read, because of lower demand)

          • EV’s just aren’t practical for my needs. Hybrids are better suited but there just isn’t a need for me to purchase one as long as they’re not price competitive with current internal combustion offerings. For instance, I have two vehicles. One is a so-called “full sized” car my wife drives. It is her preferred car as it is large and can carry everything she needs. A hybrid/EV would need to be available with an MSRP of around $30,000 and would also need to have the space/cargo capacity my wife needs.
            As for myself, my current preferred vehicle is a so-called “half ton” truck. I don’t normally really need it, (except when I do,) but I enjoy having it. If I were to replace it with a hybrid truck, then the replacement truck would need to have a MSRP of around $35,000. It will be some time before that requirement will be met.
            As you know by now, I’m very much against my country’s federal tax credit for EVs. It is outrageous that one can get a $7500 tax credit for purchasing a EV that has a MSRP of $22,995 or less. I’m making the political effort to do away with that incentive as well as our tax incentives for installing solar panels at one’s home.
            We do not have a shortage of oil in the US. Even now, there is an effort by the oil companies to lift my country’s export ban so that we can sell our oil to the rest of the world.

          • http://www.resilience.org/stories/2014-05-25/the-great-imaginary-california-oil-boom-over-before-it-started

            Please read this the US might still have an oil shortage, hope for the US you’re right, but I doubt it, with reports like these.
            The only reason oil compagnies want to export is because (right now) oil (gas and coal) is more expensive in other countries.

            I agree with you fully that all countries should remove all incentives, subsidies and tax credits, for cars and energy, not just for solar, wind and EVs, but for fossil fuels and nuclear as well, if it’s done incramental, it won’t hurt the economy to much (it will hurt, but that can be controlled). When prices for oil, gas and coal start going up (slowly), people will go solar and EV by the millions, even if price drops in solar and storage (for EV) stagnate, because of incramental removal of incentives.

      • Yes,I much prefer taxing employment,income,and investment to obtain funds to underwrite pollution and sprawl.

        • So that would be, like what? Your intelligent answer?

          • Presently we are supporting low gas prices just like bread is supported in Egypt.While we indirectly pay for the external costs of fossil fuels through other taxes.the only way to avoid those taxes is either through fraud or clever dodges via the tax code,or by just trying to work more.I would much prefer to pay a higher gas,or better,a revenue neutral carbon tax.

          • If you want to pull price supports for gas production and EVs then feel free to do so. Artificially raising the price of fuels, though, is nonproductive and not doable.

  • This will never pass . . . but it is good to push the Overton window over.

  • Excellent idea from the senator and excellent ideas from posters here. Another would be (if it still has to be tied into a federal income tax rebate) is to allow it to be spread out over, say, 5 years. There are LOTS of folks who could be classified as “middle class” and who don’t pay in annually anywhere near $7500.

    • Yes. It should not be an “all in one year” credit. Spread it out over years.

    • Yep. I’m one of them that pays very low taxes because don’t make much. I live in Vermont. We need something with a lot more teeth. I’m not holding my breath waiting for it. All the incentives seem to be for people that are upper middle class and above. There is no way I would even consider buying a $45,000 vehicle, ev or not, period!

    • If you were in the middle quintile of income,and self employed your ~ tax would be 7500 or more.I agree they need to allow carry forward and offset any of the money sent to the federal government,including payroll tax.how to fund it?obviously with a carbon tax,adjusting yearly to make up the revenue lost.

  • Tax breaks are stupid. It is a way to please middle class without giving them much, low end get nothing, and the upper middle yuppies who would do it anyway get the full amount. It doesn’t stimulate economically better than just about every alternative either.
    As Edison said, it would be a shame if the fuels ran out before we started to harness the sun.

  • It would be for the “upper” middle class, you’d have to earn a lot to get 10,000….

    • Mostly yes, but leasing companies can claim the 10k on your behave. So it would kind of benefit leasing more. The purchase benefit would be for those buying used after the leasing as the resale value price would drop to account for the subsidy.

  • I can argue effectively against using a tax credit to decrease car emissions. It would make more sense to tally up how much money this tax credit would cost in forgone revenue and then use that amount to directly subsidise low emission cars based on a sliding scale with the cars that result in the least greenhouse gas emissions getting the largest subsidy. This way efficient hybrids and electric cars would both be subsidised, and this is important because our goal is to reduce greenhouse gas emissions in the most effective way per dollar of subsidy possible rather than pick winners in transportation technology. (Personally I’m certain electric cars are a winner, but good parents can’t have a favorite child.) And this subsidy could be made revenue neutral by taxing – sorry, I forgot that taxing is of the devil – placing an emergency climate debt levy on inefficient greenhouse gas emitting vehicles and using revenue from that to subsidise low emission vehicles.

    • I wish we could make you president… of the US, Australia, and the world. Not joking…

  • A cash rebate would make a big difference! Since it would be taken off the sales price you would not be financing as much resulting in a more afordable payment. More people would say I can afford that and would buy the car.

  • I would prefer instead of the tax credit, require that all cars be labeled for their TCO. It won’t cost a penny and would instantly make EVs look better to the consumer.

    And I know EPA labels have the savings thing going but that is confusing for people. The dealer should be required to say for example:

    This gas car costs 20k upfront, TCO 35k, This EV costs 30k upfront, TCO 35k.

  • The senator first ought to consider keeping his nuclear power plant open, to supply Vermonters with no-carbon electricity.

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