Automakers Urge Congress to Lift EV Tax Credit Cap

General Motors Co, Ford Motor Co, Chrysler-parent Stellantis NV and Toyota Motor North America have urged Congress to lift a cap on the $7,500 electric vehicle tax credit, citing higher costs to produce zero-emission vehicles in a letter.

The joint letter from the automakers’ CEOs stressed they have pledged to invest over $170 billion through 2030 to aid in EV development, production and sale.

But the current $7,500 tax credit phases out after a manufacturer hits 200,000 vehicles sold. GM and Tesla are no longer eligible for the consumer tax credits. Toyota reported its credits will expire by the end of 2022 after it hits the cap. Ford also will hit the cap
this year.

"We ask that the per-(automaker) cap be removed, with a sunset date set for a time when the EV market is more mature," the automakers said in the letter. "Recent economic pressures and supply chain constraints are increasing the cost of manufacturing electrified vehicles which, in turn, puts pressure on the price to consumers."

Automakers fear the window of opportunity for the U.S. Congress to extend EV tax credits will close if Republicans take over the Senate and the House in mid-term elections.

Not everyone agrees with the need to extend the cap. In April, Sen. Joe Manchin questioned the need to extend electric vehicle tax credits, citing strong consumer demand and Chinese production of battery components.

"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," Manchin said. "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."

In 2021, the Biden Administration proposed hoisting EV tax credits to $12,500 -- including a $4,500 incentive for union-made, U.S. assembled vehicles.

Manchin also opposed the union-only incentive, as did Toyota.

President Biden also backed a 30% credit for commercial electric vehicles, a $4,000 used EV tax credit, and phasing out credits for EVs manufactured outside the United States.