Automakers want Congress to drop the EV tax credit cap

The $7,500 federal EV tax credit has been used for several years to entice consumers to make greener car purchasing decisions, but it has expired for some manufacturers, and they feel the government needs to remove limits on that incentive The CEOs of Ford, GM, Stellantis and Toyota wrote a letter to congressional leadership asking them to remove the sales-based tax credit cap. The companies said that the move would help counter economic factors and supply shortages.

There is a credit for the first 200,000 cars sold. Ford and Toyota could hit the cap this year if they reach the 200,000-unit threshold. State-level discounts are unaffected by this. The companies want Congress to replace the unit-based cap with a sunset date that will end the credit once the EV marketplace is more mature.

It's unclear if enough politicians will warm up to the idea. The need for extended credits was questioned by Senator Joe Manchin. Any attempt to legislate the credit could fall apart if the Senate shoots down bills often.

There are strong reasons for the companies to act now. The car industry is worried that if Republicans regain control of one or both sides of Congress, it will kill chances of extending tax credit. The chances that the GOP will back an extension are low, since former President Trump tried to eliminate the credit in his proposed 2020 budget.

You might be right that the customer tax breaks aren't as important as they used to be. GM plans to sell a Chevy Equinox EV for $30,000, whileTesla has long-term plans for a 25 grand car. Although these models are years away and won't compete with the lowest priced conventional cars, they hint at a future where EV are genuinely affordable without government subsidies.