The White House proposed on Monday eliminating a tax credit worth up to $7,500 on the purchase of new electric vehicles, a move it says would save the U.S. government $2.5 billion over a decade.
Major automakers have been lobbying Congress to extend the credit that phases out after companies hit 200,000 vehicles sold. They are hopeful Congress could expand the benefit by including it in a package of extended tax provisions that would otherwise expire that could win approval this year.
Tesla Inc and General Motors Co both hit the 200,000 figure last year, but other major automakers are far from that figure. The credit consumers receive for buying Teslas fell to $3,750 on Jan. 1 and will drop to $1,875 for six months starting July 1.
The credit for GM vehicles will fall to $3,750 on April 1, and then drop to $1,875 in October for six months.
It will completely disappear for Tesla buyers in January 2020 and in April 2020 for GM.
In November, a congressional report said 57,066 taxpayers claimed $375 million in electric vehicle tax credits in 2016. Congress previously estimated the cost of the credit at $7.5 billion between the 2018 and 2022 fiscal years.
The credit enjoys strong support among Democrats in Congress, but Senator John Barrasso, a Republican who chairs the Senate Environment and Public Works Committee, has proposed legislation to end it entirely.
In December, White House economic adviser Larry Kudlow said the administration of President Donald Trump wanted to end subsidies for electric cars and other related items, including renewable energy sources.
“As a matter of our policy, we want to end all of those subsidies,” Kudlow said. “And by the way, other subsidies that were imposed during the Obama administration, we are ending, whether it’s for renewables and so forth.”
Trump last year threatened to eliminate subsidies for GM in retaliation for the company’s decision to close five North American plants and cut 15,000 jobs.
The Trump 2020 budget also proposes ending funding for a Energy Department loan program that aided automakers building more fuel-efficient models, including Tesla, Ford Motor Co and Nissan Motor Co. But the program has not funded a new loan since 2011.
The National Highway Traffic Safety Administration is seeking $14.2 million for the deployment and development of self-driving car technologies, including testing and research to address regulatory issues.
Trump’s $4.7 trillion budget, which seeks to slash funding for foreign aid and the State Department and increase spending for the military and a border wall, is expected to be rejected by Congress.
Reporting by David Shepardson, Editing by Rosalba O'Brien