Summary
- President Trump’s executive actions do not impact ability to claim EV tax credit or access bargain EV leases
- A proposed bill introduced by Senator John Barrasso and 14 Republican Senators could end the EV tax credit, impacting automakers like GM and Ford
- The bill includes three different EV affordability credits, with potential $7,500 federal EV tax credit
- There is a proposed federal EV tax of $1,000 in addition to state EV surcharges
- The oil industry supports ending the EV tax credit, arguing for competition on a level playing field and stating that EVs are driven less than gasoline vehicles in the U.S.
Article
President Trump’s recent executive actions do not directly impact car shoppers’ ability to claim the $7,500 EV tax credit or access affordable EV leases. The power to end the EV tax credit lies with Congress, and a bill introduced by Senator John Barrasso and 14 Republican co-sponsors aims to do just that. This proposed legislation could eliminate the EV tax credit as well as two other credits for used EVs and fleet EVs, including the controversial Commercial Clean Vehicle Credit, which has been used to exploit a leasing loophole.
The leasing loophole allowed automakers to offer appealing lease prices for EVs by taking advantage of the $7,500 tax credit for each leased vehicle, regardless of its price or origin. The latest version of the EV tax credit has restricted eligibility, requiring buyers to meet income requirements and purchase vehicles that meet specific criteria such as American assembly, EV battery sourcing, and price limits. Despite these restrictions, the EV tax credit has served as a point-of-sale rebate since 2024, aiding in upfront affordability for EV buyers.
The oil industry strongly supports the end of the EV tax credit, with the American Fuel & Petrochemical Manufacturers emphasizing the need for equal competition. In response, a companion bill introduced by Senator Deb Fischer aims to impose a $1,000 federal tax on EVs at the point of sale to cover road use costs. However, this one-size-fits-all strategy fails to consider that EVs are driven less on average than gasoline or diesel vehicles, according to data from the Department of Energy.
The proposed bills highlight the ongoing debate surrounding EV tax incentives and road usage fees. The potential elimination of the EV tax credit poses a challenge for automakers and consumers who have come to rely on the credit for affordability. Additionally, the introduction of a federal tax on EVs raises questions about the fairness of such a measure and its impact on the adoption of electric vehicles in the U.S. Overall, the future of EV tax incentives and fees remains uncertain as Congress considers these new proposals.
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