Top Democrat urges new EV incentives

David Shepardson
Detroit News Washington Bureau

Washington — – The Senate’s top Democrat called on Congress to expand tax incentives to boost electric vehicle sales after Tesla Motors decided to build a $5 billion battery factory in Nevada.

Sen. Majority Leader Harry Reid, D-Nev., said in a speech this week that the federal government needs to do more to spur sales of electric cars.

“In order to truly promote innovation, we must as a Congress create opportunities for consumers to invest in advanced technologies, and we haven’t done that yet,” he said. “We need more tax incentives for that. In 2008, we encouraged America to invest in the growth of the electric car industry with tax credits for qualified electric vehicles.”

But Congress has taken no action on President Barack Obama’s repeated calls to hike incentives for electric vehicles in his last three budgets.

For the last three years, he has called in his annual budget to hike the tax credit for electric vehicles to $10,000, up from the current $7,500. It would allow dealers to claim credits as long as they were disclosed to buyers, as a way of allowing buyers to get the credit as a point-of-sale rebate rather than when they file a tax return the following year.

Obama has said he wants to hike the Energy Department’s vehicle research budget 75 percent to $575 million and create a $2 billion trust fund to fund research into getting the country off foreign oil over the next decade.

U.S. sales of full-electrics and plug-in hybrids in 2013 jumped 84 percent over 2012 to more than 96,000; price cuts and new models helped spur additional sales. In 2013, automakers sold nearly 49,000 plug-in hybrids, up 27 percent over 2012 — and 47,600 electric vehicles, up 241 percent — according to Ward’s Automotive. That’s a big jump over the 18,000 sold in 2011.

Reid said the Tesla Motors battery gigafactory “will spur economic development in Nevada. It is expected to pump $100 billion into the state’s economy and create up to 22,000 jobs over the next 20 years.”

California — joined by nearly a dozen other states — requires most automakers to build some zero-emission vehicles, which will prompt automakers to continue releasing EVs.

Reid praised the Advanced Technology Vehicles Manufacturing program, created by Congress in 2007 and funded with $25 billion in 2008 in a law signed by President George W. Bush. The program was created to spur the production of more fuel-efficient vehicles. Tesla won a $465 million loan it repaid early from the program.

“The facts speak for themselves — Tesla re-paid the loan in full, nine years early. Tesla is the company it is today because of this loan,” Reid said. “Tesla’s investment in Nevada shows what is possible when public-private partnerships and smart federal and state policies are encouraged.”

But the long dormant Advanced Technology Vehicles Manufacturing program hasn’t made any new loans in three and a half years. It came under scrutiny after two of five companies that received loans halted production.

In April the Energy Department said the program was open to new loans, including to auto suppliers, start-up automakers and major automakers.