After reporting that congress was likely to extend the tax credit for new electric vehicles, we’ve reviewed the text of one draft bill that may be in consideration.
Now, it’s important to note a few things: We don’t know that this draft bill that was introduced in the house is what’s going to make it into law. We don’t know that any changes to the law will be passed at all. We don’t know if the President will sign it. We don’t know if changes will be made before the bill is enacted.
With all those caveats, let’s take a look at this draft bill and see what it says:
New Electric Vehicles
As we previously reported, the per manufacturer cap for sales of new electric vehicles would go from 200,000 to 600,000. This would mean that instead of going to $0 in 2020, EV tax credits for Tesla and GM would go to $7,000 per new vehicle.
Previously, we had thought that this meant that all cars sold in 2019 after the 200,000 cap was exceeded would also qualify for $7,000. But there has been a lot of confusion and argument about this and based on this draft bill it looks like the changes only apply to new vehicles sold after the bill is passed.
None of the details are certain until this becomes law, but if you’re affected by this little detail it’s something you’ll be watching closely.
As Tom Randall noted, it creates quite a strange situation if the tax credit goes down and then suddenly goes back up:
Used Electric Vehicles
Besides the $7,000 federal income tax credit for new vehicles, a $2,500 income tax credit for used electric vehicles is also being considered.
If this passes, expect the value of your used electric vehicle to shoot up as more people become interested in the used EV market.
Solar and Wind
The federal tax credits for solar and wind installations, which were set to expire at the end of this year, will be removed for several more years under this draft bill.
This would be great for solar installers and for the business prospects of low-cost solar subscriptions.
At the end of the day, we don’t know what is going to be passed or if anything is going to be passed at all. Politics are crazy, especially in Washington D.C. right now. Don’t count on it as a sure thing, but there is a golden opportunity to make progress on this issue in the next couple of weeks as congress passes an omnibus spending bill.