Electric Car Tax Credit May Become Rebate

President Obama has been calling for it, and now U.S. Senator Debbie Stabenow (D-Mich.) has introduced legislation that, among other things, would transform the $7,500 tax credit for the purchase of an electric vehicle (EV) into a tax rebate that would go to car buyers at the point of sale. Stabenow’s “Charging America Forward Act” would also fund 500,000 rebates, instead of the current 200,000 tax credits, and it would extend the recently expired tax credit for businesses who purchase hybrid heavy-duty trucks, SUVs and cars, offering up to $100,000 there.

Stabenow pitched the bill – which also includes an extension of $2 billion in support of advanced battery technologies – as a boost to Obama’s goal of getting 1 million EVs on U.S. roads by 2015, and as jobs generator, particularly for her hard-hit home state of Michigan. “Other countries are acting to develop their own advanced vehicle markets because they realize the tremendous economic potential this new technology represents,” Stabenow said in a statement. “These initiatives will allow Michigan innovators to continue to out-compete the world and create new jobs here.”

Nissan Leaf electric vehicle

image via Nissan

A rebate on EV purchases would put the program in line with the “Cash for Clunkers” program of 2009, which delighted dealers by drawing people to showrooms but seemed to be a bureaucratic headache for some.

And USA Today reported that the National Automobile Dealers Association (NADA) is worried about the burden a new rebate program for EVs would place on dealers. In a statement, the NADA said, “It is not reasonable to expect dealers to determine a car buyer’s tax status in the showroom. When the specifics are made public, NADA will examine the proposal to determine if it makes sense for consumers and dealers.”

Pete Danko is a writer and editor based in Portland, Oregon. His work has appeared in Breaking Energy, National Geographic's Energy Blog, The New York Times, San Francisco Chronicle and elsewhere.

  • Changing to a rebate would be very helpful, and there are multiple ways to do it without being onerous to the dealers- we’ve some experience with this from the last generation of EVs. But while we’re revising things, the credit/rebate should also be conditional on the vehicle selling at or below MSRP, to keep dealers from absorbing the rebate by packing the price. Dealers can still mark-up if they want, and buyers who want to pay the premium (and forgo the rebate) to get a car sooner than later are entitled to do so. But there’s no reason taxpayers should be subsidizing that scenario.