$7,500 Tax Credit

New Bill Could Save Tesla's $7,500 Tax Credit

Sen. Dean Heller, R-Nevada, proposes a change to the electric vehicle tax credits that could be huge for new EV buyers.

By Andrew Moseman
TESLA

Sen. Dean Heller, Republican of Nevada, has introduced a bill that would mean a lot more people would be able to get the full $7,500 tax credit for buying a Tesla. He introduced the unpublished bill last Thursday, Car and Driver says.


The background: U.S. law grants a $7,500 tax credit for people buying an electric vehicle. However, the credits are capped based on the number of vehicles an automaker has sold. Only the first 200,000 cars sold qualify for the full credit. Tesla, in particular, is quickly approaching the cap.

As we reported this summer, only Teslas delivered by the end of 2018 will qualify for the $7,500 credit. Teslas delivered in the first half of 2019 would qualify for half as much: $3,750. And deliveries in the second half of 2019 would halve again, down to a tax credit of just $1,875.

Heller's bill, called S.3582, would do away with the 200,000-car cap entirely. Instead, the IRS would allow for the full $7,500 EV tax credit up until 2022, at which point it would phase out for all car companies.

It's not hard to see why Heller would be the one to support this legislation. Tesla built its gigafactory in Nevada and now employs more than 3,000 people there, and Elon Musk's company is the clearest beneficiary of rewriting the rules in this way.

GM and Nissan stand to benefit, too, because they dove into EV manufacturing ahead of other established companies. Car and Driver says GM has sold 187,000 plug-in cars through September, mostly in the form of the Chevy Volt and Bolt. Meanwhile, Nissan has moved 127,000 Leafs.