Electric car federal tax credit may rise to $10,000 but won’t apply to Tesla

The White House is considering giving the electric vehicle market a significant boost by raising the maximum tax break for zero emissions vehicles, reports Detroit News.

A rise from the $7,500 federal tax credit currently available to a headline sum of $10,000 has been proposed in an analysis by the US Treasury. Were the new maximum tax break to be rubber-stamped, however, it would not apply to vehicles worth more than $45,000.

It means that buyers of cars currently offered by Tesla Motors – namely the Model S – and the new Cadillac ELR (which probably needs it most) would not be eligible for a tax break. The highly regarded Nissan LEAF, however, would be available for just $18,970, even before state incentives.

The format of the federal tax credit would also change under these proposals. Instead of filing for a tax credit on income taxes, electric car buyers would allow dealers to offer a rebate at point-of-sale, furthering encouraging indecisive car buyers to commit to electric cars.

While this is excellent news for consumers, automakers will also benefit, and the format of the tax credit would change. At the moment each manufacturer has a 200,000-vehicle cap on the number of cars it can sell with the offer of a federal tax credit. The US Treasury’s new proposals suggest that the cap be removed, although credit would be entirely phased out in 2022 after a reduction in 2019.

Hydrogen fuel cell vehicles – which Honda, Toyota and Hyundai will all launch within the next 18 months – would also be in line for more generous incentives, although figures haven’t been mentioned. The current credit is $20,000 for vehicles weighing more than 14,000 pounds and $40,000 for vehicles weighing more than 26,000 pounds. It is set to expire in 2015.

Increased tax credits would be expected to help President Obama reach his goal of “putting one million advanced technology vehicles on the road by 2015.” It is estimated that tax breaks for alternatively-fuelled vehicles could total $4.8 billion by 2024.

Posted by Richard Lane

Richard is a London-based automotive journalist specialising in future mobility and sustainable design. Having fallen for cars because of the virtues of a particular German flat-six, it's what we'll all be driving next that now interests Richard most. Dream garage: Alfa Romeo GT 1300 Junior and a Detroit Electric SP:01.

  1. Awesome.. Telsa Model E for 44,999.99.

    Sign me up.


  2. Chitral Cheetah October 8, 2014 at 3:29 AM

    I drive an electric vehicle. I produce what I need and more from the Solar panels I installed. So the only energy that I am unable to produce for my consumption is the gas that I use for heating (CA – so not that much) and soon I will make my water heater electric as well.

    I understand that not all can do it or have a Solar friendly location but those who can, should.



  3. Video below of what is happening in California at municipal wastewater treatment plants using fuel cell technology to produce 3 value streams of electricity, hydrogen and heat all from a human waste! This is pretty impressive in my opinion for hydro-refueling infrastructure.

    “New fuel cell sewage gas station in Orange County, CA may be world’s first”


    “It is here today and it is deployable today,” said Tom Mutchler of Air Products and Chemicals Inc., a sponsor and developer of the project.

    2.8MW fuel cell using biogas now operating; Largest PPA of its kind in North America


    Microsoft Backs Away From Grid



  4. It would apply to the next “Gen” of Teslas, the Model E, base price $35K or so. The 200+-mile range and a $10K Point Of Sale rebate would drive sales through the roof.

    But not due until early 2017.


  5. A horrrible idea gets even worse. There is absolutely no reason why electric car buyers should be singled out for tax credits. The government is trying to artifically level the playing field, and thereby pick winners and losers. The government is notoriously incompetent at managing the economy. If these products are so great, then they should stand on their own merits.


    1. Definitely! As such, the gas tax should be raised to reflect the true cost of a gallon of gasoline (about $15/gallon: http://www.npr.org/2013/03/28/175550949/imf-gas-prices-dont-reflect-true-costs).

      If internal combustion engines are so great, let them stand on their own merits at $15/gallon!


      1. So Brandon, if you’re going to be 100% honest and have some integrity to your argument….the look at the statement from your quoted article.

        “.. it doesn’t reflect the costs that gasoline consumption imposes on society — in the form of traffic, congestion, pollution and global warming..”

        your wonderful electric cars will impose on society in the form of traffic, congestion, pollution (batteries, manufacturing, tires, etc) and global warming (the fossil fuels used and gases emitted during production of the above)….so the doom and gloom and costs of internal combustion, are not only on internal combustion…..

        if people on your side would actually be honest about the facts, we could actually have a worthwhile discussion and maybe get somewhere…but dare to dream.


        1. To compare the full well to wheel footprints of various fuel pathways in the transportation sector, see the wealth of data compiled and made available in the public space by the CA Air Resources Board Low Carbon Fuel Standard. Informed by Argonne National Labs GREET model, this research reveals the differences between convenitonal fossil fuel pathways and the alternatives, with electricity showing a clear advantage over conventional fuels, as does natural gas, particularly land fill gas. Currently, the benefits of electrification are best in the Pacific Northwest, but with renewable energy standards increasing renewable energy mix on the grid, your EV gets cleaner with age, isn’t that just beautiful! As far as I can tell, feedstock for gasoline and diesel is becoming increasingly difficult and more expensive to extract; tar sands, oil shale, fracking and eor processes, ersulting in higher carbon feedstocks. The pathways appear to be growing farther apart over time…


    2. Actually they do, but getting people to investigate enough in the first place is the real hurdle. Once enticed to drive electric, many or most people decide never again to drive anything else!


  6. This is great news. It’s been on the table for a couple of years now, so let’s hope it finally happens. If we can’t get a decent carbon tax, this is the next best thing.


  7. Uh… does this have to go through congress?


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