Obama administration offers a new approach on EV credits

Obama administration offers a new approach on EV credits

The Obama administration is taking a new approach to incentives for electric and other alternative-fuel cars, proposing to provide the incentives to the automakers themselves, rather than consumers who buy them. The proposal is contained in its 2013 White House budget proposal delivered to Congress last week.

The plan calls for the elimination of the current $7,500 electric vehicle tax credit and replacing it with an advanced technology vehicle credit of a maximum $10,000 per vehicle through 2016, with no cap on how many vehicles it might apply to. The credit would drop to $7,500 in 2017, $5,000 in 2018 and down to $2,500 in 2019. The credit would go to the seller of the vehicle or to the financing company.

There is also a proposal to add incentives for alt-fuel, medium and heavy-duty vehicles designed to cover the added expense of the new technologies needed to achieve fuel and emission standards for these vehicles.

The new approach is designed to allow OEMs to keep down the MSRPs of alternate fuel vehicles in an effort to speed up their acceptance by the buying public. According to one budget document, the credit would be less for vehicles priced over $45,000, like the Tesla Model S. That credit would be capped at $7,500. The credit range would be based on the vehicle’s MPGe, or miles-per-gallon-electric.

“We’re pleased that the president is committed to advanced technology vehicles like the Nissan Leaf,” David Reuter, Nissan’s vice president of corporate communications, said this afternoon. “And we’re glad that clean energy is a focal point of his budget. However, we need clarification of exactly what vehicles are included since program has proposed changes from today. Tax credits have helped with the adoption of EVs and other advanced technology vehicles, but we cannot rely on them indefinitely, so this proposal is a positive outline for further discussion.”