Working in the electric vehicle industry, we get questions all the time about the status of federal tax incentives for their purchase. We hope this article will clarify the current situation.
The end of 2011 saw the end of three of the four Federal tax credits designed to encourage consumers to switch to electric vehicles (EVs).
The tax credit for installing residential charging equipment, up to $1,000 maximum, was allowed to expire as of January 1, 2012, as was the maximum $2,500 maximum tax credit toward the purchase of two- and three-wheeled electric vehicles with a battery capacity of at least 2.5 KW and certain Low Speed Vehicles (IRS Code Section 1142). Converting a gas-powered vehicle to either a plug-in hybrid or electric vehicle will no longer be eligible for a tax credit either – which used to be worth up to $4,000 (IRS Code Section 1143).
It will be interesting to see just how much these changes affect the growth of the Electric Vehicle industry in the US.
The one incentive that was allowed to remain was the maximum $7,500 credit given to purchasers of electric or plug-in hybrid vehicles (IRS Code Section 1141) – but the vehicle purchased must be from a government-approved, mainstream automaker, making it unavailable to those who purchase Low Speed Vehicles (LSVs) and Neighborhood Electric Vehicles (NEVs). This credit is due to be phased out on a manufacturer-by-manufacturer basis once an automaker sells 200,000 units.
In a controversial move, Congressman Mike Kelly (R-PA) has introduced a bill (H.R. 3768) that would repeal this remaining tax credit. While he stated that he supports the development of electric vehicles, he feels that this should not be accomplished at taxpayers’ expense. Critics say that his objection to the tax credit stems more from his interest in protecting his investments in oil and gas than from any moral or ethical commitment to budget-cutting measures.
Again, it will be interesting to see whether he can convince his fellow legislators to support his efforts to remove this last big electric vehicle governmental incentive or not.