The usual year-end lobbying of Congress by industries for last-minute legislation to renew expiring tax cuts and subsidies is well under way in Washington.
Tesla TSLA, -0.58% , General Motors GM, -0.96% and other players in the electric-vehicles sector have a role in the scramble around a possible tax package with so-called “tax extenders,” as they could score an expansion for a key EV credit.
“Thanks to bipartisan, broad-based support, we believe the EV tax-credit extension is very well-positioned for enactment,” said Mike Carr of the EV Drive Coalition, a group whose members range from Tesla, GM and Nissan NSANY, +0.03% to electrical equipment giant ABB ABB, -0.13% , as well as from the Nature Conservancy to charging station providers Volta and ChargePoint. “A large and diverse set of stakeholders — including environmentalists, public health groups, automakers and utilities — are urging Congress to act given its consequences for American global competitiveness, clean air and climate change.”
“It is less a question of if it’s in a tax package than if a tax package will happen at all. If there is an agreement on tax, there is a very high likelihood the EV provision is included,” Carr added in an email to MarketWatch.
The potential extension for the EV credit has been included by House Democrats in a proposed GREEN Act that aims to deliver a wide range of energy-related tax incentives. It would raise the sales level at which the credit starts to get phased out.
The current $7,500 EV tax credit, which allows taxpayers to deduct part of the cost of buying an electric car, phases out once an automaker hits 200,000 cumulative EV sales, and both Tesla and GM already have sold more than 200,000 electric vehicles. If the extension gets the green light, there would be a $7,000 credit until a manufacturer hits 600,000 vehicles sold.
The extension has been an issue in Washington throughout 2019, with some lawmakers backing it in the spring as they rolled out a bipartisan Driving America Forward Act, which has been folded into the GREEN Act.
Meanwhile, in an example of the opposition to the EV tax credit, Republican Sen. John Barrasso of Wyoming has argued this year that it’s “time to pull the plug” on the subsidy for EV buyers and rolled out a “Fairness for Every Driver Act.”
Some analysts have been downbeat on the prospects of an extension for the EV tax credit. “There’s a chance,” but it’s “not very likely” and just “theoretical,” said James Lucier, an analyst and managing director at Capital Alpha Partners, in an email to MarketWatch. Lucier likened the situation to a scene in the movie “Dumb and Dumber,” when Jim Carrey’s character gets excited by a “one out of a million” chance and says, “So you’re telling me there’s a chance.”
Other tax breaks that have been under consideration at year’s end include a credit that would benefit railroads and tax relief for brewers, wine makers and distillers.
Republican and Democratic lawmakers have shown they’re interested in some year-end dealmaking, even as an impeachment effort against President Donald Trump ramps up and divides Washington. On Thursday, they reached a deal in principle on a dozen spending bills, in an agreement that likely heads off a government shutdown.