Proposed Bill to Increase Number of Plug-in Hybrid and EVs Eligible for Federal Tax Rebate

Michigan congressmen Sander Levin and Carl Levin proposed a new piece of legislation on Wednesday, which would potentially increase the number of plug-in hybrid and electric vehicles eligible for the $7,500 tax credit from 200,000 to 500,000 per manufacturer.

“Green vehicles represent the vanguard of automotive innovation, but they have to be economical for consumers and profitable for manufacturers”, Sander Levin said in a statement. “Raising the cap on this credit will help carmakers reach the demand and production scale necessary for long-term viability," he added.

The bill was presented just one day after President Barack Obama reiterated the government's commitment to put 1 million eco-friendly vehicles on the road by 2015.

Introduced via the Recovery Act of February 2009, the current tax incentive applies to five vehicles – Chevrolet Volt, Tesla Roadster, Nissan Leaf, Coda sedan and Wheego LiFe –, with a per-manufacturer cap of 200,000 units.

The increased number of eligible cars should help keep EV and hybrid sales on track, as many of them are simply too expensive without the applied federal tax rebate. For example, the Chevrolet Volt sells for $41,000 (delivery included) before the tax break.

Additionally, the White House wants to take one step further and convert the $7,500 tax cut, which applies after the vehicle was bought, into a rebate that customers could use at the time of purchase.

President Obama also promised increased federal grants by as much as 30% for companies researching and developing batteries and electric drivetrains.

“With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have a million electric vehicles on the road by 2015”, Obama said in his State of the Union Address.

Last but not least, the U.S. administration is offering separate $10 million grants for as many as 30 cities across the country, which will be invested into public charging stations, electrified parking space access and fleet conversions.