A bipartisan group of senators introduced legislation Wednesday that would extend a lucrative tax credit for electric vehicles that could benefit companies like Tesla Inc. and General Motors Co.
The chances of the Senate extending the electric vehicle tax credit, which President Donald Trump proposed rescinding in his most recent budget request, aren’t great, according to analysts.
“Prospects aren’t zero — EV credit expansion could still be part of a bigger bargain — but they aren’t good because the Congress isn’t showing much room for bipartisan bargains anytime soon,” said Kevin Book, managing director of Washington-based consultancy ClearView Energy Partners. “The sponsor list isn’t exactly the Trump Country white pages, either.”
The current $7,500 per-vehicle incentive for consumers, credited with helping establish the nascent market for electric cars, phases down once a manufacturer sells 200,000 of the vehicles.
The legislation by Michigan Democrat Debbie Stabenow would grant automakers a $7,000 tax credit for an additional 400,000 vehicles after they reach the 200,000 vehicle cap, according to statement from Stabenow’s office.
“At a time when climate change is having a real effect on Michigan, today’s legislation is something we can do now to reduce emissions and combat carbon pollution,” Stabenow said. “Our bill will help create American jobs and cement Michigan’s status as an advanced manufacturing hub.”
The bill, which also extends a credit for hydrogen fuel cell vehicles for 10 years, is also being backed by Republicans Lamar Alexander of Tennessee and Susan Collins of Maine. Democratic Representative Dan Kildee of Michigan is introducing companion legislation in the House.
Democrats would likely need to “prioritize the credit as their big ask” over other party tax priorities and put something for Republicans on the table in order to see it through, said Liam Donovan, a tax lobbyist at Bracewell LLP.
The chances in the Democratic-controlled House, where more than 100 lawmakers recently asked the Ways and Means Committee to extend the credit, are markedly better.
Senate Finance Committee Chairman Chuck Grassley said Wednesday he “could not support” Stabenow’s bill extending the credit, but that he wouldn’t fight it if the House were to pass it in a tax bill of its own.
Shares of Tesla, which reached the 200,000-vehicle cap last July, rose as much as 2.7 percent before the start of regular trading. Shares were up 1.6 percent at 2:56 in New York trading. GM, which reached the cap late last year, were trading up 1.3 percent.