An Obama-era tax credit for buyers and lessees of new electric vehicles will not likely be extended as part of a new federal spending bill, Reuters reports.
A campaign led by manufacturers and Democratic legislators failed to sway Republican leaders, including President Donald Trump, who have denounced the credit as a tax break for wealthy car buyers.
"There has been extreme resistance from the president. It's going to be difficult," Sen. Debbie Stabenow (D-Mich.) told Bloomberg this week.
The $7,500 income tax reduction was introduced in 2009 and applied to the first 200,000 electric units built by any manufacturer in the U.S. market. The nation’s EV leaders, General Motors and Tesla, exceeded that mark in 2018 but have since benefited from credits of diminishing amounts. The current federal tax credit of $1,875 for GM and Tesla units will expire Dec. 31 and March 1, respectively.
Opponents of the extension frequently referenced a 2014 IRS report that found 79% of electric vehicle tax credits went to households earning $100,000 or more. Only 1% were claimed by households earning less than $50,000.
Proponents countered the IRS figures set aside the fact that dealers were able to apply the credit to leases, which accounted for a majority of the EV market as recently as 2017, according to Bloomberg Intelligence.
Columnist George Will summarized the conservative viewpoint in an April column for the Washington Post.
"The tax credit quickly became another example of the government's solicitousness for those who are comfortable and who are skillful in defense of their comforts," he wrote. "Today, demand for electric cars is still insufficient to produce manufacturing economies of scale (after a decade of production, moral exhortations and subsidies, electric cars are a fraction of 1% of all vehicle sales), and batteries are expensive."