Congress Fails To Renew Important Electric Vehicle Tax Credits

By · January 10, 2014

Level II Charger

Homeowners could get $1,000 to buy this Clipper Creek Level 2 charger, but that was last year. (Flickr/The Digital Story)

Further proof that we have a do-nothing Congress came at the end of 2013, when our legislators failed to renew three important electric vehicle tax credits. Basically, they just didn’t get around to it before the New Year’s break. A total of 55 tax breaks went unaddressed.

  • The first credit, up to $1,000, was for homeowner alternative vehicle refueling, including the purchase of a 240-volt Level 2 EV charging station.
  • The second, for up to $2,500, could be used to offset up to 10 percent of the purchase price of an electric motorcycle (or three-wheeled EV).
  • The third, for businesses, allowed them a credit for up to 30 percent of an EV charger purchase, up to $30,000.

According to Brian Wynne, president of the Washington-based Electric Drive Transportation Association (EDTA), “We think these credits are valuable and are working to renew them. The charging credit is alternative-fuel neutral, so it goes beyond electric cars.”

Brammo Enertia Motorcycle

Brammo electric motorcycles, like this Enertia, lost their tax credit at the end of 2013. (Brammo photo)

Wynne said that credit renewal was stalled in part by some discussion of tax reform, led by Senator Max Baucus (D-MT), who is retiring. “They had a run on that, and it delayed looking at the extenders,” Wynne said. “I don’t think there was intent to let the incentives expire—that wasn’t the focus.”

A Bad Pattern

Intent or not, Congress has set a pattern of renewing credits like this for only a year, then leaving a lot of confusion in the market as it drags out the renewal process. The classic case is the wind production tax credit, which is worth 2.3 cents for every kilowatt-hour of electricity generated. That was one of the 55 credits that expired, and according to the Washington Post, “The fact that the credit constantly expires has also created a fair amount of uncertainty for the industry.”

Both of the EV credits that expired had been the victim of the one-year renewal process. That makes it difficult for companies that make charging stations or electric motorcycles to plan on what kind of sales year they'll have. "Why is it that EV, solar and wind credits are the ones that have these sunset dates?" asked Tom Saxton, chief science officer at Plug In America.

Jay Friedland, Plug In America's senior policy adviser, said his group worked to renew the credits that expired at the end of 2011, and although they were absent for much of 2012, they later became retroactive. That process will now have to start all over again. "Congress is ridiculous," Friedland said.

If there's any silver lining in this, it's that Baucus is likely to be replaced on the Senate Finance Committee by Senator Ron Wyden (D-OR), a big EV proponent who will probably push for early renewal of the tax credits.

Also dead for the time being are incentives that encourage people to take buses and trains, buy energy-efficient appliances and install renewable energy. Breaks few people will miss help NASCAR to build racetracks, subsidize the write-off of race horses, and save on expenses for motion picture producers.

The Big Credit Still Safe

In case you were wondering about the really big incentive—up to $7,500 for consumers who buy battery vehicles, based on pack size—that one’s safe for now. It doesn’t just expire, like these other credits, and only goes away after a manufacturer has sold 200,000 battery cars. If Nissan can meet its goal of selling 30,000 or more electric cars per year for the next several years, it would reach the sunset limit for the tax break in 2018 or 2019. The incentives are not entirely cut off at that point; instead, the incentive is phased out over the following year.

Buyers of conventional gas-electric hybrid cars enjoyed a smaller tax credit from 2006 until hybrid sellers reached a phase-out period after selling 60,000 vehicles. The Toyota Prius, the most popular hybrid, benefited from the tax break from early 2006 until the perk was completely phased out in late 2007. Sales of the Prius were mostly unaffected by the loss of the relatively smaller tax credit, which at its full amount was $3,400 compared to the EV credit of $7,500.


· · 4 years ago

While I was able to take advantage of the HOME charger credit, I don't think that one's all that important anymore with the fact a) you can still charge with the included Level 1 EVSE and b) charger costs have come way, WAY down.

Business charger credit: This one is very important. Needs reinstatement.

$7500 vehicle credit: glad it's staying, for now. I don't know the particulars, but like the Solar tax credit for homeowners, likely needs to look at dropping that down to $0 over a PLANNED and announced several years. Preferably a bit more slowly than Solar's 30%->10%->0%. Like, how about dropping it by $1,000 each year? That will goose Dec sales nicely, but still not "penalize" late comers too much. And if EV sales haven't become self supporting in 7 years based on their own economics... I think we're in trouble.

E-Motorcycles: I don't follow that segment enough to have anything to gainsay either way. Gut tells me that needs reinstatement for quite a while.

· · 4 years ago

Oh look, I apparently just learned to read. OK, understand about the 200,000 car limit per manufacturer now. Still, a one year phase out after that seems pretty abrupt.

· · 4 years ago

I wonder if the subsidies for oil companies were also stalled by discussion of tax reform.

· · 4 years ago

Tax Credits are Worthless…

Tax Credits are worthless if you can’t use them. We purchased a LEAF and charger in 2011. Got got the $7500 tax credit but were denied the $900 tax credit we submitted for the charger installation. Tax credits are complicated and full of loopholes. EV tax credits should be done away with. EV Government discounts, subsidies, or rebates should be given at time of purchase with little or No paperwork, No tax returns, No CPAs, and No discrimination.

· · 4 years ago

Diesels enjoyed a small tax credit as well around the same time as hybrids. Expired at the end of 2010 i think. It never fully phased out so at the end of tax breaks most cars still had the full amount.

· · 4 years ago

This is why it is so hard to do business in this country. Uncertainty=risk. Politicians are oblivious to this.

· · 4 years ago

This week Bloomberg news reports that Ron Wyden is pushing for early renewal of tax extenders and the Senate Finance Committee might vote to revive extenders as early as the week of March 31. According to a Senate Finance Committee aide, issues still being considered are which credits would be extended and whether to extend the credits through the end of 2014 or 2015.

New to EVs? Start here

  1. Seven Things To Know About Buying a Plug-In Car
    A few simple tips before you visit the dealership.
  2. Incentives for Plug-in Hybrids and Electric Cars
    Take advantage of credits and rebates to reduce EV costs.
  3. Buying Your First Home EV Charger
    You'll want a home charger. Here's how to buy the right one.