White House Pushes For a $7,500 Instant Cash Rebate Towards Electric Car Purchases

President Obama delivers the 2011 State of the Union address, in which he called for one million electric cars on U.S. roads by 2015.

A day after U.S. Senator Debbie Stabenow (D-Mich.) reintroduced a bill to turn the existing $7,500 federal electric car purchase tax credit into an instant rebate—and a couple of weeks after President Obama called for a renewed goal of getting one million electric cars on the road by 2015—the Obama administration is putting its full weight behind the instant rebate proposal, saying it's the most effective way to make electric cars more accessible.

According to Automotive News, David Sandalow, the U.S. Department of Energy Assistant Secretary, said, "The current credit is going to be reformed so it will be claimable by dealers or others and then with clear requirements that the benefit of the credit is to be passed along to the consumers. It is more effective as an incentive like that than to provide it as a credit that has to be applied against income tax returns filed at a later time.”

That sounds like pretty confident talk considering that the proposal would have to pass through a divided congress before it becomes law. Last year Senator Stabenow introduced a bill that would have converted the tax rebate to an instant rebate, but in the craziness that was the lame duck session, the bill never saw the light of day. Now that the spotlight is back on Obama's one million EV goal, Stabenow has taken up the charge again, reintroducing the bill.

The way the law currently stands, purchasers of electric cars are eligible for a $7,500 federal tax credit but have to wait up to a year or more—whenever they file their taxes—before they get any money back... and even then they may not qualify for the entire amount. An instant rebate would act as a down payment towards that purchase. The only way the current $7,500 credit can be used "instantly" is if the electric car is leased. In that case the manufacturer can claim the tax credit at the end of the year and pass the savings on to the customer at the time of the sale.

Not only would this change in law reduce the barriers toward owning an electric car and speed up their adoption, it would also have the effect of dramatically cutting back on fraud and the federal and state resources spent dealing with it. As it turns out, already the IRS has seen more then $33 million of fraudulent claims for the $7,500 electric car tax credit—some of them even for the purchase of Hummers.

Source: Automotive News (subs. req'd)