GM at center of mpg, electric-vehicle tax credit fights

Keith Laing
The Detroit News

Washington — General Motors Co. is at the center of a political fight in Washington about gas-mileage rules and the future of tax credits for electric vehicles as Congress gears up for an end-of-year push.

The Detroit manufacturer is one of the loudest voices lobbying for an extension of a federal tax credit that provides up to $7,500 to buyers of electric vehicles, but GM has angered some Democrats by siding with President Donald Trump in a fight with California over fuel-economy regulations.

General Motors Co. is at the center of a political fight in Washington about gas-mileage rules and the future of tax credits for electric vehicles as Congress gears up for an end-of-year push.

GM and Tesla Inc. are the leading automakers pushing Congress to raise a lifetime ceiling of 200,000 electric vehicles per manufacturer that qualify for the tax break. Both carmakers hit that ceiling in 2018. 

Reaching the maximum number of tax credits begins a phasing-out of the tax credit offered, falling by half every six months until it hits zero.

A Senate aide involved in both of the issues says some Democratic members are unhappy about GM’s decision to intervene in a lawsuit between California and the federal government to argue in favor of the Trump administration's position that Washington should create one set of gas mileage rules for all the nation's cars. But the source, who asked not to be identified because they were not authorized to speak publicly, said Democrats remain committed to the goal of advancing the deployment of electric vehicles. 

U.S. Sen. Gary Peters, D-Bloomfield Township, who is a co-sponsor of legislation that would triple the limit for electric-vehicle tax credits, said it is important for Democrats to remain focused on the broader goal of increasing the number of fuel-efficient vehicles on U.S. roads: "It is critical that we keep electric vehicles affordable to consumers and help the American auto industry compete in building the vehicles of the future."

GM argues its decision to intervene in a lawsuit filed by California against the Trump administration over the mileage rules was an effort to ensure there would be one national standard for fuel economy that all automakers could follow. 

"GM has a vision for a world with zero crashes, zero emissions and zero congestion. The pathway to that vision includes continuously improving fuel economy and our commitment to an all-electric future," Jeannine Ginivan, a spokeswoman for GM, said in a statement provided to The Detroit News. "An all-electric future cannot be achieved overnight, and GM remains committed to year-over-year improvements in conventional fuel economy in addition to our leading investments in electrification." 

Ginivan added: "The EV tax credit provides customers with a proven incentive as we work to establish the U.S. as a leader in electrification, helping make electric vehicles more affordable for all customers. Modifying the tax credit will allow all customers to continue to receive the full benefit and provide them with a greater choice of vehicles." 

A bipartisan bill introduced by U.S. Sen. Debbie Stabenow, D- Lansing, in April would triple the number of electric cars eligible for the federal tax credit, raising the cap from 200,000 cars to 600,000.

“The transportation sector is the number one source of carbon pollution in our country," she said in a statement. "At a time when the climate crisis is having a real effect on our Great Lakes, Michigan agriculture and our way of life, passing my bipartisan electric vehicle bill is one of the best actions we can take right now to reduce carbon pollution and help consumers transition to clean energy technologies.”

 A competing measure by U.S. Sen. John Barrasso, R-Wyo., would eliminate the tax credit for electric cars and institute a new tax on electric cars and alternative-fuel vehicles to boost the coffers of the federal Highway Trust Fund that is used to pay for construction projects.

The electric-vehicle tax credit has been a point of contention since it was established in 2008. 

Conservatives have argued the federal government should not be propping up electric vehicles at a time when buyers have demonstrated a clear preference for gasoline-powered SUVs and pickups. They say the benefit goes primarily to wealthy car buyers who can otherwise afford the higher sticker prices usually associated with EVs. 

EV supporters say the credit has helped spur the nascent market for plug-in vehicles. They argue that killing the tax credit would strip carmakers of a key incentive to convince drivers to consider buying electric vehicles, and would make it harder for car manufacturers to hit government fuel economy requirements. 

With an election year looming in 2020, December will be seen as the last chance for most major bills before the presidential election heats up. President Trump has already threatened to kill the tax credit; and in retaliation for GM's plans to idle four U.S. plants, he threatened to block its customers from getting the subsidy before the Detroit automaker had even hit the limit.

GM has found itself back in Trump’s good graces by siding with him in the mpg fight with California, but now the Detroit manufacturer is in the crosshairs of angry Democrats who are wondering if the tax credit is worth fighting for if GM is siding with Trump on fuel-economy standards that are less stringent than California's.

Brett Smith, director of propulsion technologies and energy infrastructure for the Center for Automotive Research, said GM's role at the center of both the gas-mileage and EV debates shows how volatile both issues have become in Washington. 

"The industry has always for decades and decades pushed the idea that market has to pull this technology," he said of the debate about the future of the EV tax credit. "The Obama administration in 2008 made electric vehicles a political football. The Trump administration has punted the heck out of that football." 

Smith said GM finds itself in a bit of an unfamiliar position as an outspoken voice on two issues that appear to be diametrically opposed. 

The fact that GM and Tesla have sold over 200,000 electric cars to max out on the tax credit shows the federal government's effort to promote the technology was at least marginally successful. But Smith said the technology has still not come far enough in over a decade to be widely adopted in the U.S.

Christine Spann, communications director of the Electric Drive Transportation Association, which lobbies for policies that promote electric drive technologies, said her organization hopes Congress will remember the EV incentive is bigger than any issues lawmakers may have with GM.  

"The EV tax credit extension is not about any specific company, it is about reinforcing the entire electric drive industry, including the automakers and the supply chain," she said. 

Smith said GM and other carmakers are lobbying for an extension of the electric vehicle tax credit because they know they will have to keep producing plug-in vehicles to stay viable.

"They understand on a broader scale that they are going to have sell electric vehicles, whether it's in California, the U.S. or certainly globally," he said. "GM is no longer a player in Europe, but they certainly are in China. They need all the help they can and whatever they sell here can help offset some of the production costs."

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Twitter: @Keith_Laing