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Proposed bill could lift cap on electric-vehicle tax credits

A bill introduced to the Senate on Oct. 11 could remove the cap on electric vehicles eligible for tax credits.

Sen. Dean Heller, R-Nev., proposed the legislation so automakers would not have to start phasing out tax credits once each manufacturer sold 200,000 electric vehicles, according to Reuters.

Under the current rule, the tax credit starts phasing out once a manufacturer sells 200,000 EVs.

Electric-vehicle drivers are eligible for 50% of the credit if the vehicle was purchased in the first two quarters of the phase-out period, according to the IRS. They are eligible for 25% of the credit if the vehicle was purchased in the third or fourth quarter of the phase-out period.

So far, Tesla Inc. is the only automaker that has sold 200,000 electric vehicles. In Tesla's case, vehicle orders that were placed by Oct. 15 were still eligible to receive the full $7,500 credit. It drops to $3,750 for purchases between Jan. 1, 2019, and June 30, 2019, and finally to $1,875 for purchases between July 1, 2019, and Dec. 31, 2019, according to Tesla.

Although Heller's proposed bill removes the 200,000-unit cap, it aims to establish a new phase-out timeline for the tax credit, according to

The bill would phase out the credit for all automakers in 2022, Reuters reported.

On Oct. 9, Sen. John Barrasso, R-Wyo., introduced legislation that would end federal electric-vehicle tax credits completely.

Barrasso's Fairness for Every Driver Act would kill the credit while requiring electric-vehicle drivers to pay a fee that would go to the Highway Trust Fund, which helps finance public roads.