Michigan Chevrolet Dealers May Worry About Proposed Electric Vehicle Tax Credit and Possible Outcomes

DETROIT, M.I. – Michigan Chevrolet dealers may have heard the recent announcement by Michigan Sen. Deborah Stabenow. She has proposed a new tax credit program: Charging America Forward Act. It would offer an instant tax credit at the time of purchase of an electric or plug-in vehicle as well as extending current hybrid tax credits.

The following is a breakdown of the current and new proposal as well as thoughts for and against the proposal.

Current Hybrid and Electric Tax Credits

For electric vehicles purchased in 2009, owners may have been eligible for a federal income tax credit of up to $7,500 depending on the capacity of the battery being used within the vehicle.

Hybrid and diesel vehicles purchased after December 31, 2005, to December 31, 2010, may have been eligible for a federal income tax credit of up to $3,400; although no eligible diesel vehicles were manufactured until 2008. These two types of vehicle credits started to phase out for manufacturers after they sold more than 60,000 of these eligible vehicles.

Any alternative fuel vehicles purchased between January 1, 2005, and December 31, 2010, may have been eligible for a federal tax credit of up to $4,000.

Every type of vehicle had specific requirements for the credit to be approved by the IRS such as meeting EPA emission standards; having certain battery capacities; and being mostly used in the U.S. All credits were issued once the owner filed his or her taxes for the following year.

New Proposal

The new proposal is specifically for new electric and plug-in hybrid vehicles and provides buyers with an instant rebate of up to $7,500 when they purchase one of these types of vehicles. This will allow consumers to pay less at time of purchase instead of having to wait until filing taxes the following year. This proposal is similar to the Cash for Clunkers program that had also been proposed by Sen. Stabenow.

Businesses may be eligible for a tax credit from $15,000 to $100,000 for hybrid medium and heavy duty trucks. The amount given to the business depends on the truck size. The proposal would also allow for previous hybrid truck tax credits to extend until 2014 as well as include new plug-in hybrid trucks into the eligibility requirements.

Current tax credits for investments in plug-in electric vehicle charging stations will be extended and expanded to cover the outlet as before, but now would cover any wiring and other costs that will have to do with installing the station in a home or business.

Finally, the proposal would authorize the U.S. Energy Department to award another $2 billion in grants to further expand the U.S.'s ability to increase its production of advanced battery technologies within the country. This could potentially increase U.S. production from two percent to 40 percent and, ultimately, give the U.S. greater market share and create thousands of more American jobs.

Dealer Worries

There are some Michigan Chevrolet dealers and possibly other dealers that feel this proposal would add a lot of complexity to the current tax credit program that, according to the National Automobile Dealers Association (NADA), is working just fine as it is. NADA believes that this proposal may add a greater burden on its members as there will be pressure for the dealers to be the ones to qualify the buyers for the tax credits.

NADA stated in a press release, "It is not reasonable to expect dealers to determine a car buyer's tax status in the showroom. When the specifics are made public, NADA will examine the proposal to determine if it makes sense for consumers and dealers."

Another issue for dealers to consider is possibly the worry of ensuring the money credited to buyers is then received back from the government.

Supporters

Supporters of the Charging America Forward Act include General Motors, Edison Electric Institute, Johnson Controls, Calstart, Eaton Corp and more.

Spokeman for General Motors, Greg Martin, said in a press release, "We are pleased to see Senator Stabenow's legislation that integrates all of the components necessary for successful acceleration of electric vehicles in the marketplace.  We look forward to working with Congress on legislation that leads to widespread adoption of electric vehicles."

There may still be a lot of details to be worked out and reviewed, and until the complete proposal is released, Michigan Chevrolet dealers will continue to wait to see if the proposal will benefit or cause major issues.

Check back for updates on the Charging America Forward Act.

[Source(s): U.S. Department of Energy, Sen. Stabenow Official Website, The Detroit News]