The federal electric-car tax credits survived the most recent tax overhaul legislation in 2018, but they're back in the crosshairs. U.S. President Donald Trump's proposed budget for the 2020 fiscal year includes the end of the tax credits for consumers who purchase a qualifying electric vehicle.
The Detroit News reported on the budget proposal on Monday, which does away with the $7,500 tax credit buyers receive after filing their taxes the following year after purchase. In total, the budget proposal amounts to $4.7 trillion and the president said ending the electric-car tax credits would save $2.5 billion over the next 10 years. As the law currently stands, every automaker receives the same number of tax credits, up to 200,000 vehicles. Once an automaker sells its final qualifying electric car, it triggers a sunset period. The credit is halved to $3,750 for six months before it halves again to $1,875. The $1,875 is available for another six months before it falls to $0.
Last year, Tesla was the first automaker to reach the cap and General Motors followed later in the year. Both automakers have teamed up with Nissan to lobby for an extension on the tax credits. The law was designed to sell electric cars at a discount to keep them in line with gas- and diesel-fueled vehicles while technology helped make batteries and EV powertrains more affordable. Tesla and GM say they would be at a disadvantage to other automakers just now readying their own electric vehicles.
GM pushed back on the proposal to end the tax credit and said "removing the federal tax credit right now would be premature and damaging" to any efforts to make electric cars more affordable to U.S. buyers and work toward the automaker's zero-emissions future.