Proposal to Take Effect 180 Days After Enactment
U.S. Senate Republican lawmakers have proposed ending the federal tax credit of up to $7,500 for new electric vehicle buyers 180 days after the enactment of a pending tax cut bill, Reuters reported on June 16 (local time).
The lawmakers have also reportedly proposed ending the tax credit of up to $4,000 for used electric vehicle buyers 90 days after the law is enacted.
Additionally, they suggested ending the $7,500 tax credit for leased electric vehicles that do not meet purchase tax credit requirements, including North American assembly, effective June 16. Currently, leased vehicles are eligible for the tax credit regardless of whether they meet requirements such as North American assembly, battery, and critical minerals content. Leased electric vehicles that do meet the purchase tax credit requirements would remain eligible for the credit for 180 days.
The version of the bill passed by the House would extend the tax credit of up to $7,500 for new electric vehicle buyers through the end of this year. However, automakers that have not sold more than 200,000 electric vehicles in the U.S. so far would be allowed to extend the credit through the end of 2026. The bill also includes provisions to impose an annual fee of $250 on electric vehicles and $100 on hybrid vehicles for road maintenance, and to phase out the electric vehicle battery production tax credit starting in 2028.
Meanwhile, if the bill is ultimately passed, U.S. electric vehicle companies such as Tesla are expected to be negatively affected. JP Morgan has estimated that the elimination of the electric vehicle tax credit could reduce Tesla's annual profits by approximately $1.2 billion.
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