General Motors, Stellantis, Toyota, and Ford all have one thing in common: Aside from making cars, they’re all going to Congress to beg for more carrots to entice customers. CNBC reports that as automakers come close to hitting their EV tax credit caps, they’re now looking to Congress to raise the cap to effectively eliminate it so more buyers can take advantage of the credit.
A joint letter by the automakers was issued to Congress on June 13, 2022. In it, the automakers call for a cap higher than the current 200,000 vehicle limit. Once an automaker hits this, the tax credit becomes unavailable to them. So far, only GM and Tesla have hit the cap, but other automakers should hit it soon as more EV models roll out.
It’s almost sort of saying, “Look! We’re doing what we said we were going to do.” The letter also outlines all the investments the various companies have made into electrification in the last few years, from investments in the country to new model development.
A surprising move comes, though, when the letter states that a sunset date should be set for the credit once the EV market is “more mature” with the letter highlighting foreign EV growth is key to growth here in the U.S.
Not all lawmakers are on board, however, with Democratic senator Joe Manchin not wanting the government to foot the bill.
“There’s a waiting list for EVs right now with the fuel price at $4. But they still want us to throw $5,000 or $7,000 or $12,000 credit to buy electric vehicles. It makes no sense to me whatsoever. When we can’t produce enough product for the people that want it, and we’re still going to pay them to take it — it’s absolutely ludicrous in my mind,” he said.
The automakers say the tax credit is key to keeping EVs affordable as they deal with rising production costs. The problem with all of this, though, is multifaceted. Automakers could just lower the prices of EVs so more people could get into them. They’ve made record profits despite rising production costs. And I hate to keep sounding like a broken record, but there’s also the issue of selling the tax credit as a discount on the vehicle’s price. It’s a tax credit, not a rebate or incentive. Nothing comes off the car’s price when you buy it.
There’s also the issue of the credit benefiting those who don’t really need it, with a 2021 survey showing that 80 percent of EV buyers who took advantage of the tax credit made over six figures a year. All this is in addition to the credit artificially propping up the EV market. So maybe the real solution is to get rid of the credit entirely and let market forces sort it out.