The tax credit brings the base model Chevrolet Bolt under $US30,000
Source: Chevrolet

Electric vehicle maker Tesla is forming a coalition with other automakers to lobby the US government to extend the generous tax incentive that has driven the uptake of electric vehicles.

Tesla is being joined by Japanese carmaker Nissan as well as General Motors Co, to create what will be known as the EV Drive Coalition.

The $US7,500 per vehicle tax incentive (just over $A10,000), which has been a key factor in creating a viable market for electric cars in the US, was initially slated to be phased out as each automaker selling EVs reached 200,000 sales.

Tesla was the first automaker to reach that limit, as sales for the popular Model 3 took off leading it to become the best-selling EV in the country.

The maximum tax credit, which is still available for Tesla customers in the US according to its website, helps bring its mid-range model under $US35,000 (around $A48,000).

Tesla mid-range

General Motors, who make the Chevrolet Bolt battery electric car and its stablemate the PHEV Chevrolet Volt, are expected to hit 200,000 sales either by the end of the year or early 2019, according to Bloomberg New Energy Finance analyst Salim Morsy.

Nissan, who had sold 114,827 units of the popular Leaf at the end of last month, is lagging behind both GM and Tesla in terms of EV sales in the US – and is clearly also keen on an extension on EV tax credits for this reason.

The tax credit brings the base model Chevrolet Bolt under $US30,000($A41,000), while the Nissan Leaf comes down as low as $US22,490 ($A31,000) after applying the credit.

With prices for EVs still at a premium compared to ICE models, the tax credit creates a level playing field for the burgeoning market while demand and R&D grow enough to enable automakers to bring prices more in line with ICE options.

“We’ve been able to make tremendous strides in the underlying technology of electric vehicles,” says coalition spokesperson Trevor Francis.

“The battery power and the range have improved significantly over the last few years. With every
new advancement, we get closer to becoming an economically sustainable market. However, we’re not there yet, and keeping the cap will have a negative impact on a sustainable U.S. electric vehicle market,” he said in a statement.

Francis argues that the concern is not only an issue for automakers, as the removal of the tax credit could see what is becoming a strong industry in the US employing thousand of people, crash and burn.

“Choosing not to reform the tax credit will severely hinder America’s ability to compete in a global market. At that point, it wouldn’t be just an automotive issue. As it stands now, electric vehicles are responsible for nearly 300,000 jobs. This is a jobs issue and an economic issue in addition to a consumer issue,” says Francis.

Joel Levin, Executive Director of not-for-profit EV promoter Plug In America, says the tax credit allows EVs to better compete against ICEs.

“Lifting the cap would create a more level playing field for all manufacturers, giving consumers the freedom to decide which car they want in a free and fair market. Increased competition spurs more American innovation and technology,” Levin said in a statement.

Janet Peace, senior VP at the US Center for Climate and Energy Solutions, emphasises the importance of a healthy electric vehicle market as a key component of climate change policy.

“A reformed tax credit will affect more than those who purchase electric vehicles,” she said in a statement.

“While a mature EV market will be a boon to the American economy, it will also play a major role in reducing greenhouse gas emissions, a significant contributor to climate change. This would be a win for consumers, for the economy and the for environment.”

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