Opinion: Reforms needed for federal EV tax credit

Clean fuels vehicles aren’t just the future, they’re here now.

In fact, alternative fuels vehicles support almost 300,000 American jobs, including thousands in Michigan. Sales of electric vehicles, also known as EVs, have grown in recent years, in part because of their low operating cost and environmental benefits. Another factor is a federal tax credit that has helped reduce their upfront cost, allowing more consumers to afford this exciting new technology. While the tax credit has been effective, it must be updated to reflect the growth and potential of the evolving EV industry.

That’s why consumer, industry and environmental stakeholders recently came together to form the EV Drive Coalition. Our mission is to reform and recharge the electric vehicle tax credit to keep the U.S. competitive in the rapidly changing transportation sector.

The existing $7,500 tax credit has spurred industry growth because it goes directly to the consumer who purchases an electric vehicle. As a relatively new industry, these tax credits have propelled growth because consumers are confident their investment is beneficial to both themselves and the environment. The problem is that for each manufacturer, there is a cap for how many vehicles can be sold with the tax credit. Reforming the credit to lift the manufacturing cap will avoid stunting the industry’s growth and keep us competitive in the global market.

We acknowledge there is a need to phase out the tax credit eventually as more electric vehicles hit the road. However, the U.S. electric vehicle sector still needs the credit to reach its full potential. Failing to fix the tax credit will allow global competitors to take over the EV market while America falls behind. The EV credit is a highly successful, market-based approach to keeping U.S. auto manufactures competitive, and phasing it out too early would hinder this emerging sector of our economy.

When Georgia phased out the EV tax credit, the state saw a 90 percent decline in EV sales, illustrating the importance of the two-way investment between the consumer and producer. Consumers want options and, with so many new electrified vehicles coming to market over the next few years, need to be assured that they can invest in the EV of their choice at an affordable rate.

An analysis by Clean Fuels Michigan found that the clean mobility sector contributes $18.8 billion to Michigan’s economy as well as $700 million in state and local taxes, and this is just the beginning. Bloomberg New Energy Finance estimates that by 2030, global sales of electric vehicles will reach 30 million. Ten years later in 2040, there are estimated to be 500 million electric vehicles on the road. The unprecedented potential for growth in the EV industry can only be fully realized if we continue to reward consumers for their investment in a sustainable future and encourage more EV manufacturers to create more jobs here at home.

The EV Drive Coalition understands that automobiles are an essential part of everyday, American life and believe that the future of EV production starts here, in places like Michigan where automotive sector jobs account for  15 percent of the workforce. America’s progress in the EV industry is steady, but through reforming the tax credit, it can soar.

Published in The Detroit News on November 29, 2018

Bills aim to improve clean mobility infrastructure

Legislation intends to eliminate obstructions for the sale, research and development of technologies.

Grand Rapids Business Journal – By Ehren Wynder

On the heels of a recent Clean Fuels Michigan report, two Michigan state representatives introduced bills to help grease the wheels for clean mobility infrastructure.

Reps. Bronna Kahle, R-Adrian, and Michael Webber, R-Rochester Hills, introduced legislation to help remove barriers for the sale, research and development of electric vehicles and other clean mobility technologies.

Kahle’s House Bill 6328 would create incentives for businesses that make investments into the research and development of electric vehicles and advanced mobility. This bill would help small and midsized companies invest in R&D for advanced mobility in Michigan.

Specifically, the bill calls for amendments to the Michigan Strategic Fund Act allowing advanced propulsion and mobility technologies to qualify for the fund.

“It’s important to note this is not a new cost to the state by any means,” Kahle said. “It’s an expansion of who can apply for grants from the Michigan Strategic Fund.”

Kahle said she was inspired by Venchurs Vehicle Systems, an auto manufacturer headquartered in her district of Adrian.

“They are doing some wonderful things providing compressed natural gas conversion for fleet vehicles,” she said.

Venchurs also is a qualified vehicle modifier for Ford Motor Company and offers CNG conversion for the full Ford lineup, according to the company’s website.

Webber’s House Bill 6083 would make electric and alternative fuel vehicles exempt from a portion of the sales tax, which would be calculated based on the vehicle’s weight.

“We definitely want to get those vehicles out on the road,” Webber said. “That’s a little bit of what my legislation is trying to do — get folks to look at these clean vehicles. They want to be fuel efficient, but then they look at the price tag.”

If Webber’s bill passes, vehicles up to 6,000 pounds would receive a $1,000 exemption, up to 16,000 pounds would receive a $2,500 exemption, up to 26,000 pounds would receive a $5,000 exemption and vehicles over 26,000 pounds would receive a $7,500 tax exemption.

Tax exemptions apply for both the sale of a new alternative energy vehicle and the sale of a motor vehicle that has been converted to an alternative energy vehicle. The exclusion also applies to a new alternative energy vehicle purchased for lease if the term of the lease is at least two years.

Clean Fuels Michigan, a group of local companies focused on clean fuel alternatives, released a report claiming the state’s clean mobility sector contributes $18.8 billion to the Michigan economy each year and generates over $700 million in state and local taxes, according to previous Business Journal coverage.

The report also said Michigan’s clean mobility supply chain contributes over 69,000 direct and indirect jobs to the state economy.

Clean Fuels Michigan defines clean-fuel vehicles as ones powered by biofuels, propane, natural gas, electricity and hydrogen fuel cells. Hybrid vehicles also are included.

“Clean transportation technologies will play an increasingly important role in Michigan’s auto industry, which is why it is important to have policies in place that position Michigan to lead in this rapidly changing industry,” said Mike Alaimo, executive director of Clean Fuels Michigan.

While Alaimo applauded the recent push for legislative change, he added there still is “massive” potential for growth and further investment in the clean mobility industry. With over 3,160 clean technology transportation patents and 375 R&D centers, Michigan is beating California in terms of innovation, but the potential remains largely untapped.

“As robust as the industry is emerging in Michigan, it’s growing rapidly elsewhere,” Alaimo said. “Indiana and Ohio are aggressively supporting the growth of these vehicles. We’re No. 1 in terms of energy patents, but we’re near the bottom in terms of implementations … that’s going to be our main focus going into fall and winter.”

As part of its effort to raise awareness, Clean Fuels Michigan is coming to Grand Rapids on Oct. 15 to host a Clean Mobility Expo at The Rapid CNG Fueling Station. The event will feature various clean-fuel vehicles on display and panel discussions with industry experts.

Kahle and Webber said they were inspired partly by the Clean Fuels report to get on board and introduce legislation to spur alternative vehicle development.

“The top priority for me is promoting policies that strengthen our economy,” Kahle said. “This report played a role for me in terms of growth in industry, growth in jobs. It confirms what I already saw in my visit with Venchurs.”

Both bills still have yet to be voted into law. House Bill 6328 was referred to the Committee on Transportation and Infrastructure, and House Bill 6083 was referred to the Tax Policy Committee. Neither bill has been voted out of its respective committee at press time.

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