As you may have heard, the existing federal tax credit of up to $7,500 for electric vehicles (EVs) would be repealed under the tax legislation filed in the U.S. House of Representatives with support from the White House last week. If the tax bill is passed in its current form, the EV tax credit would be available for 2017 purchases but not for 2018 and beyond. We strongly oppose the repeal of the EV tax credit. If you are concerned too, please contact your US Representative and express your feelings. But honestly, we know that the Massachusetts and Rhode Island delegations will be opposed to the tax bill for several reasons.
The federal tax credit goes a long way towards making the purchase of an electric vehicle more affordable and bringing down monthly lease payments. The cost of batteries, the key component to EVs, keeps falling, but the tax credit is needed for a while longer in order to transform the car market. We see the tax credit as compensation for the fact that the price of gasoline does not properly account for its contribution to global warming, environmental degradation, and health impacts.
The average price of a new car running on gasoline is $35,000. With the federal tax credit, EVs are able to get at or below that number. That price differential is important given many people’s reluctance to try a relatively new technology. So the credit is important in terms of building consumer demand.
The tax credit is working. According to InsideEVs, sales of EVs in America have risen 25 months in a row. Some car companies like Chevrolet, Nissan, Tesla, and BMW have been producing EVs in large volumes for a few years. Today, every carmaker in the world is planning on producing EVs within a few short years. They are competing to our benefit. There will be more choices, with pressure to improve quality and reduce prices.
What does the House bill mean for car buyers?
Though we have read accounts that the House tax bill is unlikely to pass, time will tell. It is not our intent to scare you into buying an EV sooner than you would want. However, given that Republicans in the House and the President are in favor of the EV tax credit repeal, if you have been thinking about buying or leasing an EV in the next several months, you should really consider taking delivery in November or December.
When we get more information on the status of the tax bill legislation, we will update this blog. Regardless of whether the tax credit is repealed, these facts are still relevant:
- The cost of EVs will keep coming down, but probably at a slower pace than if the market were supported with the tax credits.
- EVs cost much less to maintain than internal combustion automobiles.
- The Massachusetts state MOR-EV rebate of up to $2,500 is still going to be available.
- We will continue to offer consumers discounts negotiated with car dealers for EV purchases and leases through Drive Green with Mass Energy and People’s Power & Light. This month we want to highlight some great deals on the Chevrolet Bolt, Chevrolet Volt, Toyota Prius Prime, and BMW i3. For details, please sign up for a test drive (Massachusetts link here, Rhode Island link here).