On February 23, 2021, Senator Jeff Merkley and Congressman Peter Welch introduced the Electric Cars Act. This is bicameral legislation that would extend the electric vehicle tax credit for 10 years and help implement charging infrastructure.
Currently, a federal tax credit of up to $7,500 is available for the purchase of electric vehicles. However, the law caps the number of eligible vehicles at 200,000 per manufacturer. After reaching the threshold, a phaseout of the credit begins. Domestic manufacturers General Motors and Tesla have already hit the manufacturing cap, and consumers no longer receive tax credits for those American brands. As a result, the law currently creates incentives for electric car buyers to purchase imported vehicles over American electric vehicles.
The Electric Cars Act would improve the current tax credit by:
Eliminating the per manufacturer cap, allowing consumers access to the tax credit for the next 10 years, regardless of the manufacturer from which they purchase their car;
Allowing buyers to use the tax credit over a 5-year period or apply the credit on the spot at the dealership to reduce the price of the vehicle, making the credit more applicable to those without large tax liability; and
Providing a 10-year extension of tax credits for alternative fuel vehicles and charging infrastructure to incentivize the buildout of this important infrastructure around the country.
“As climate chaos continues to ramp up with record-setting winter storms, violent hurricanes, and catastrophic wildfires, it is imperative that we transition away from gasoline-powered vehicles, which are fanning the flames of the crisis,” said Senator Merkley. “Consumers are already looking for electric cars, and this bill will help drive adoption faster—and make sure more of those cars are made by American workers in American factories.”
“We need to quickly and aggressively invest in electric vehicles to combat the global climate emergency that threatens all of our local communities,” said Congressman Welch. “Owning an electric vehicle can be cheaper and offers significant public health and environmental benefits, but for many Americans they are unaffordable at the dealership. This bill makes the next generation of electric vehicles accessible to more people by allowing them to receive the electric vehicle tax credit right away. Encouraging electric vehicle adoption is a common sense win for consumers, the environment, and American workers.”
The full text of the legislation is available here.
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