US electric vehicle tax breaks will expire on Sept. 30
Sweeping tax and budget legislation approved by Congress on Thursday means $7,500 tax credits for buying or leasing new electric vehicles will end on September 30, as well as a $4,000 used EV credit, that have helped juice green vehicle sales in recent years.
The Electrification Coalition, an EV advocacy group, said on Thursday "as EVs secure a growing share of the global automotive market, it is obvious that the future of transportation is electric; this bill forfeits America's role in that future to China."
Congress first approved a $7,500 EV tax credit in 2008 that it phased out after manufacturers hit 200,000 vehicles. The credit was expanded in 2022 to cover leased vehicles and the per manufacturer cap was lifted.
Separately, U.S. automakers stand to receive significant benefits from the final bill that eliminates penalties for failing to meet Corporate Average Fuel Economy shortfalls. The measure makes it easier for automakers to build gas-powered vehicles.
Barclays auto analyst Dan Levy said the tax credit phase-out in less than three months means EV sales will significantly jump via a "pre-buy" since some consumers will move up purchases planned for later with sharp declines in the
months to follow.
"We believe the bill reiterates the slowdown ahead for EV penetration in the U.S., with both the 'carrot' (i.e. tax credits/incentives) and the 'stick' (i.e. emissions regulations) softened," Levy wrote in a research note.
A Harvard University study released in March forecast that ending the EV tax credits would reduce EV penetration by 6% by 2030 and would save the government $169 billion in EV tax credits over a decade.
Last year, Chrysler parent Stellantis (STLAM.MI), opens new tab paid $190.7 million in civil penalties for failing to meet U.S. fuel economy requirements for 2019 and 2020 after paying nearly $400 million for penalties from 2016 through 2019. GM previously paid $128.2 million in penalties for 2016 and 2017.
In the final bill, Congress dropped a planned $250 annual fee for EVs to pay for road repairs, as well as a requirement that the U.S. Postal Service sell off its EV delivery vehicles.
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Johnson, an Apalachicola native, became involved in the Kill the Drill movement for personal and business reasons. 'This region has a deep collective memory of how the Gulf oil spill devastated the regional economy and collapsed the oyster industry in Apalachicola Bay,' Johnson explains. 'And that was just the threat of oil. The majority of the state's oyster farms operate across Wakulla, Franklin and Gulf counties, and these areas downriver would be most impacted by oil drilling upriver (at the proposed site in Calhoun county). If there were to be a spill upriver because of drilling in the basin, it would have catastrophic environmental and economic impacts on the area that would be felt for generations.' Johnson also points to the region's frequent weather-related natural disasters, such as hurricanes, as another reason why drilling had to be banned in the region. Sign up to Down to Earth The planet's most important stories. Get all the week's environment news - the good, the bad and the essential after newsletter promotion 'Our shellfish farmers are still recovering from the multiple hurricanes of 2024,' she explains. 'But the reality of being a Florida farmer is having to contend with these weather-related events. Hurricanes and natural disasters are outside of our control. Permitting oil drilling in ecologically sensitive areas is very much within our control and is an unnecessary threat to our industry.' Tant agrees. 'We are a hurricane-prone state,' she says. 'We can't get away from that. It's not a question of will we get hit by a hurricane because we know it's going to happen. But an oil spill caused by a hurricane would make the disaster 100 times worse.' 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'This bill is essential to prevent unnecessary and irreparable harm to Apalachicola Bay, as well as the economies and ecosystems that depend on it,' he says. After DeSantis signed the bill into law, the threat of drilling has now receded into the distance for the foreseeable future.
