House Bill Proposes Repeal of Plug-In Vehicle Tax Credit

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Earlier this month when U.S. Rep. Mike Kelly’s office was asked how he would accomplish his proposal to end the plug-in vehicle tax credit, his press secretary answered merely that he is “keeping his legislative options open.”

Well, as things have turned out, the Republican congressman’s legislative option now has a name – H.R. 3768. The Dec. 30 bill proposes elimination of the $7,500 tax credit for buyers of all plug-in vehicles.

“This is not to say I don’t support the development of electric cars,” Kelly said in a December Op-Ed for USA Today. “I do, but not at taxpayer expense.”

If you have previously noted the congressman – also a reportedly disgruntled GM dealer from Pennsylvania, north of Pittsburgh – you might have read he fired one of his employees at his Chevy dealership for consenting to bring in a Volt. Since then his dealership dropped out of the Volt program it had initially been a part of, and he is effectively trying to remove Volt sales incentives from every other Chevy dealer in the country as well.

Evidence of this has come from his using the Volt as a negative example in speaking before his congressional peers, and seeking other mainstream media avenues to present his strong views.

Kelly has been an ardent critic of some of GM’s initiatives, particularly after he was nearly forced to close his family’s Cadillac dealership during GM’s bankruptcy restructuring.

His bill, as reported yesterday by The Hill, is an answer to what he says is “lack of mainstream demand” for the Volt and other electric cars.

“The misuse of taxpayer dollars to promote the electric vehicle is emblematic of the Obama administration’s overall misunderstanding, and ultimate manipulation, of the free market principles that undergird our economy,” he said. “President Obama has become the ‘Venture Capitalist in Chief,’ gambling hard-earned taxpayer dollars in green projects and industries that are more politically than performance driven.”

Kelly has also been pursuing answers from GM as to why it did not disclose the federal government’s side-impact crash test fire in June, and has complained that only the upper crust are really taking advantage of the tax credit at the mainstream’s expense.

Kelly said the tax credit is “largely going to the affluent few who can actually afford to buy an electric car, which costs anywhere between $40,000 [Chevy Volt] to $97,000 [Fisker's Karma].”

Priming the plug-in pump yet needed

It has never been a secret that high-income households have been among the first to adopt GM’s Voltec car.

The nuances involved in an automaker’s launching disruptive technology in this economic and political climate have been many, and advocates have contended the whole picture is not nearly as cut-and-dried as critics like Kelly have asserted.

GM’s plan to roll the vehicle out has been conservative, initially starting in only seven states. The company did accelerate roll out to all 50 U.S. states this year, and intends to produce 45,000 for the U.S. market this calendar year and 60,000 worldwide.

The Volt had to overcome several public relations hurdles in 2011 including criticism allegedly intended to obfuscate its benefits.

These extra smoke screens could not have helped considering a poll this year showed many mainstream buyers have not absorbed the necessary understanding to make informed decisions about plug-in or hybrid vehicles.

In short, it has been said more time will be required to prime the pump, mainstream acceptance is not expected at this stage, and incentives are a good way to ease the way toward more people opening their eyes to the value the Volt and all other plug-in vehicles actually present.

While some Volt enthusiasts advise against pitching the $39,995-plus MSRP Volt for its cost-benefit value, Kiplinger was able to demonstrate that within five years it could nearly pay back a $19,000 difference when compared to a Chevy Cruze.

Kiplinger”s analysis did factor in the $7,500 federal credit which those in favor of setting the stage to improve America’s energy security have said is necessary and valid.

We shall see – perhaps as soon as a month or two – whether Kelly’s efforts to end it gain traction.

There’s little doubt that plug-in vehicle advocates will perceive it as short sighted, and somewhat concerning, as it’s unclear at this stage whether the threat could indeed be carried out.

Yesterday we asked GM’s Director of Policy and Washington Communications, Greg Martin, and he said Kelly does have the industry’s attention.

“It’s going to be a matter we’re all going to watch closely. Every major automaker has a planned offering coming soon,” Martin said. “So I think the tax credit could help accelerate the pace of these advanced-tech vehicles that collectively lessen our dependence on imported oil and also lessen the nation’s environmental impact from fossil fuels.”


  • evmaps

    We all hope the tax credit will remain at least till prices of new electric vehicles will be equal to other cars.
    There are countries where even recharging is free-of-charge.

    Find your charging station.
    http://www.evmaps.info

  • Houstondav

    Yes let’s do this and while we’re at it lets end the billions in subsidies going to oil companies, their rich enough. Lets also stop gas subsidies if one is to drive they should pay for privilege. Last but not least, lets stop spending hundreds of billions spent on national defense protecting the flow of oil. Yea! Lets kill all incentives that will reduce polluting our air, reduce our dependence on oil, keep monies in our local communities (electric production) and away from oil rich counties that say we are nothing but infidels. ……Fools are the drones that follow this nonsense and shame on you Mike K. Trying to garner reelection votes on the backs of the ignorant who don’t bother to do there own Googling to find the benefits. I understand Mr Kelly it is your job to represent your uninformed constituents wishes. If that included asking you to jump off a cliff would you do it or use your informed knowledge to determine that is not a good idea as is this bill.

  • Lad

    Please understand that this move is part of “The Grand Plan” of the current Republican Party. The plan is structured around the idea to rid the U.S. of it’s middle-class and to actually bring back the two class system, the rich and the poor, of the gilded age.

    The Republicans are funded heavily by the oil companies, i.e., the Koch brothers and the lobbyists of the API. If you look deeply into what’s going on in Washington, you realize your representatives are being funded and made wealthy simply by the fact they are elected, so, their votes are being bought by Big Business. BTW, this is happening in both parties.

    How do we stop it? See movetoamend.org for one answer.

  • JennyS

    Is it any surprise the oil-funded conservatives are trying to kill the EVs? They attack any alternative and any real chance for energy independence and climate responsibility with equal gusto. They are simply the party of gas and burn… As for the Volt, they’ll have to pry mine from my cold, dead fingers. I’m not giving up this car without a fight. Heck, I’m saving $150 a month in gas and with the price of oil likely to go up in coming years, I’ll probably save even more. When you add in the cost of fuel, this car is competitive with the Cruze any day of the week.

  • labtech515

    How is ending the the tax credit of $7500 for EVs, that cost between $40,000 to $100,000, part of a master plan by the Republicans to get rid of the middle class? One would think that if you can afford to pay $40,000-$100,000 for an EV you don’t need mine, or anyone else’s, tax money to do it. I’m all in favor of people buying hybrids and EVs, I just don’t want to pay for them to do it. When I decided to buy a house closer to my work and move my kids to a daycare closer to our home to cut down on our gasoline consumption I didn’t ask the federal government to pay me to do so?

  • kvietor

    As a retiree living on social security and my military pension, buying an electric car is a real stretch on my budget. And I am counting on the rebate to offset the cost. After all these years paying the hidden federal taxes on gasoline that winds up in the pockets of big oil as subsidies, I’d rather see some of that back in my pocket. Not all of us are affluent, we just want to do something to improve our environment and are willing to spend a little extra to do so.

  • MrEnergyCzar

    Why would a Republican want to get rid of Bush’s Oct 2008 EV tax credit for the first 250,000 EV’s?

    MrEnergyCzar

  • Capt. Concernicus

    I’m all for removing the $7500 rebate. And I’m all for removing EV and hybrid only HOV lanes on highways.

    P.S.
    I own a hybrid.

  • MaryAnn

    Purchasers or leasers of the Volt are not using YOUR tax money to purchase or lease the car, they are taking a CREDIT against their OWN tax liability. This is not a ‘rebate’ or ‘refund’ it is a tax credit. One’s tax liability has to be over $7,500 before they get the full $7,500 credit. If tax liability is only $6,000, that is the only credit given, one does not get a refund for the difference between $6,000 and $7,500. Anyone who can afford to purchase a Volt most likely has an income for which they are taxed way more than $7,500, so all that is happening is they are paying less tax they they would otherwise be liable to pay. Maybe they end up getting a refund but if so it is only because their liability was reduced by the credit plus other normal deductions that all tax payers can claim i.e medical costs and mortgage interest. So please explain to me how that is YOUR tax money?

  • Non Republican

    In case you haven’t figured it out by now, Republicans Suck !! The Democrats aren’t much better but at least they aren’t as bad.

  • Duude

    I have to agree with the elimination of this tax credit. The fact is electric automobiles are not ready for prime time. Battery technology is not ready to support electric vehicles. 40-60 mile range on all electric is a joke, and considering the battery will lose its capacity to recharge and will have to be replaced for $10000 in 7 years or so is absurd. Providing this tax credit now provides the incentive to produce crappy products because the government will subsidize.

  • Van

    I think the Prius PHV will hit the showrooms in March/April of 2012 sporting a base price of $32,000 and more “advanced” model for about $39,000. A tax credit of $2500 will be available.

    Lets wait and see what the market decides when it has a more affordable option.

    For example, if gas hits $5.00 per gallon this summer, Prius PHV sales may be brisk. Time will tell.

    On the other hand, I see no reason to provide tax credits for those making north of $150,000 per year which is the demographic for Volt buyers. Perhaps a 10% of base price voucher for up to $4000 would be better.

  • wagsbags

    “Kiplinger was able to demonstrate that within five years it could nearly pay back a $19,000 difference”

    They must have updated the calculator because now it shows the volt costs about $4000 more, which is more in line with what I calculate. Also note the analysis didn’t take into account that premium costs more than regular and gas is nowhere near $4. I hate it when people lie with numbers :P

  • Eric

    RE: “I hate it when people lie with numbers.”

    You answered your own objection in advance – “they must have updated the calculator”

    Or more likely the price of gas dropped and the article only says it “could” nearly pay for itself.

    Kiplinger based what it said on a constant gas price. What happens in the next five years as gas goes over $5, maybe $6 or more?

    At $5/gal, the calculator shows the Volt costs $758 more when driven 15k miles. Above that, and pretty soon the $19k less Cruze will cost more, even if Volt needs premium.

    I “hate it” when people like to feel important and ride a moral high horse by making their shallow points, calling others liars when in fact they aren’t.

  • Capt. Concernicus

    I “hate it” when people are just being themselves. :-)

  • THATS WHY

    People are forgetting that this was to reduce pollution. Why is it always about money.

  • Duude

    In that case, sell your vehicle and buy a bike. Why must it be about money or convenience?

  • MTXJOhn

    It’s pretty clear you don’t understand what tax CREDIT means. “Maybe they end up getting a refund but if so it is only because their liability was reduced by the credit plus other normal deductions that all tax payers can claim” Notice the word PLUS. This means you DO get the “difference” between $6000 and $7500 as a $1500 PAYMENT in your first example. You completely contradict yourself. On top of that according to your logic I shouldnt have to pay any taxes at all. Say if my tax liability is $10,000 and I decide I shouldn’t pay that. I’m not spending some else’s tax dollars by not paying my 10k, I’m just reducing my OWN tax liability. Extend that logic to everyone and no one should pay any taxes because they’re just reducing their OWN tax liability, they’re not spending anyone else’s tax dollars.

  • tapra1

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