Democrats look to shield tax credit from Trump

Source: Maxine Joselow, E&E News reporter • Posted: Thursday, April 4, 2019

Democrats this week unveiled a flurry of legislation to extend the electric vehicle tax credit, which President Trump has targeted for elimination.

Sen. Jeff Merkley (D-Ore.) yesterday introduced the “Electric Cars Act of 2019,” which would fully extend the electric vehicle tax credit for 10 years and help deploy EV charging infrastructure.

Currently, consumers who purchase a plug-in hybrid or electric car can receive up to $7,500 after filing their tax returns. The credit expires after a manufacturer has sold 200,000 eligible vehicles.

Trump’s fiscal 2020 budget request calls for axing the EV tax credit, which his administration claims would save $2.5 billion over 10 years (E&E News PM, March 11).

“As the rest of the world plunges ahead on electric vehicles, transitioning their manufacturing and developing new vehicle technologies, the U.S. is falling behind, rolling back efficiency standards and letting critical incentives lapse,” Merkley said in a statement.

“Every day, we see the effects of climate chaos all around us — record-setting droughts, out-of-control wildfires and deadly hurricanes and floods. Market-based incentives that help EVs compete with gas-powered cars and build clean energy infrastructure are not only good for our economy, they’re essential to our future.”

Rep. Peter Welch (D-Vt.) is sponsoring a companion bill in the House. In a statement, he noted that transportation is the country’s largest source of greenhouse gas emissions, surpassing even the power sector.

Sen. Debbie Stabenow (D-Mich.) also said yesterday she plans to introduce a bill with Sen. Lamar Alexander (R-Tenn.) to lift the cap for the EV tax credit. Tesla Inc. and General Motors Co. have both hit the 200,000-vehicle cap, meaning the credit will start to phase down for consumers purchasing their electric models.

“When you look at the budget calling for the repeal of the tax incentives for electric vehicles and renewable energy and energy efficiency, I’m really glad that Sen. Lamar Alexander and I are putting in the bill in the next few days that would actually extend the cap,” Stabenow said during a Senate Energy and Natural Resources hearing yesterday featuring Energy Secretary Rick Perry.

A Stabenow aide told E&E News the legislation is still being finalized and specifics aren’t yet available. “We should have more details in the next two days,” the aide said. “It’s still all coming together.”

Rep. Ro Khanna (D-Calif.) is also mulling legislation with Sen. Ed Markey (D-Mass.) to link the EV tax credit to domestic manufacturing. Their measure would seek to reward automakers for building manufacturing facilities on U.S. soil.

Khanna told E&E News the bill is about shoring up the United States’ ability to compete with China on clean energy.

“Right now we’re losing in the electric vehicle race,” Khanna said. “China’s making 50% of the world’s electric vehicles. We don’t want to lose that race.”

Green New Deal

Khanna, an insurgent progressive, made waves in the Democratic Party as an early backer of the Green New Deal (E&E Daily, Feb. 1). He also tied the legislation to the ambitious climate resolution.

“We need to frame it very simply,” Khanna said. “When [Republicans] say, ‘What is the Green New Deal?’ … It’s about winning the clean energy race with China.”

The Khanna-Markey legislation comes after Trump has repeatedly criticized General Motors over its plans to shutter several factories and lay off hundreds of workers in the United States and Canada.

“Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland,” the president tweeted in November. “Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get!” (E&E News PM, Nov. 27, 2018).

Paul Bledsoe, a strategic adviser at the Progressive Policy Institute, expressed support for both forthcoming bills to extend the EV tax credit.

“Producing and deploying tens of millions of electric vehicles is the key to everything from creating the next generation of U.S. manufacturing to cutting greenhouse gas emissions, yet right now America is losing the EV race to China and other countries,” said Bledsoe, a former Senate Finance Committee and Clinton White House staffer, in an email.

“If we don’t act quickly, China and other nations will dominate the EV market, just as they have in solar panels,” he added. “This is a once-in-a-generation opportunity that America cannot afford to lose.”

The Progressive Policy Institute released a white paper yesterday showing current U.S. tax incentives are inadequate to drive strong growth in the EV market.

Reporters Nick Sobczyk and Jeremy Dillon contributed.