Republicans' Tax Plan Crashes Jerry Brown's Electric Car Fantasies

The new tax reform bill eliminates a huge tax credit for electric vehicle purchases.


Gov. Jerry Brown

The full text of the House Republicans tax plan is finally here, and the media have been bubbling over with hot takes on who wins and who loses under the proposal. For my money, the biggest loser is California Gov. Jerry Brown. Because the bill eliminates the federal tax credit for electric vehicle purchases, Brown's fantasy of a California free of gas-powered autos has come to a screeching halt.

The tax bill would zero out the Plug-In Electric Drive Vehicle Credit after 2017. First put into effect in 2010, this tax credit gives a $7,500 credit to purchasers of full-electric vehicles such as Teslas and Chevy Volts. Lesser tax credits are also available for hybrids.

That's bad news for Brown, who has leaned heavily on the federal tax credit to achieve his ambitious goal of electrifying the Golden State's roadways.

Back in 2012, Brown set a goal of having 1.5 million zero-emission vehicles (ZEVs) on the road by 2025. Since then, he has reportedly suggested going even farther and banning gas-powered cars outright.

The governor has already spent a bundle of his state's money trying to rev up Californians' demand for electric vehicles. Since Brown's inauguration in 2011, California has handed out $463 million in tax rebates for hybrid and electric vehicle purchases, and it has spent another $80 million on the charging infrastructure needed to support them.

Those are just the carrots. California has also deployed the stick to get people out of their gas guzzlers, hiking the gas tax by a full 12 cents a gallon this month and tightening what were already strict vehicle emissions standards.

Yet despite all these efforts, California's fleet of electric vehicles remains tiny. Only 300,000 plug-in electric vehicles have been sold in the state, and only about 150,000 of those could be considered zero-emission. That's compared to the roughly 35 million registered vehicles in California.

If Republicans succeed in getting rid of the feds' $7,500 tax credit for ZEVs—which far outstrips California's additional $2,500 rebate for the same product—Brown will have to devote far more of the state's resources toward reaching 1.5 million ZEVs by 2025.

California is already spending $140 million a year on tax rebates for hybrid and electric vehicles, enough to provide 56,000 people with full-ZEV tax credits. If the federal tax credit were to go away, Brown would have to spend another $420 million to maintain the same subsidies for those 56,000 prospective buyers.

Electric car manufacturers, who sell about half of their electrical vehicle fleet in California, can see the writing on the wall, with many issuing statements urging Congress to reverse course on eliminating the tax credit.

"Tax credits are an important customer benefit that can help accelerate the acceptance of electric vehicles," General Motors said in a statement. The Electric Drive Transportation Association, a trade group, echoed the sentiment, expressing its deep disappointment at Republicans' proposal to "prematurely end this critical incentive."

Brown himself has expressed outrage at the proposal, saying it "transfers income from individuals and families to large and powerful corporate structures. This is bad economic policy and bad for the American people."

It's an ironic response from the governor, given that Brown's electric car fantasies rely on a federal tax credit that does the same thing, redirecting wealth from individual taxpayers to subsidize electric vehicle sales for large and powerful corporations.

There is no need for the nation's taxpayers to subsidize this mess. Whatever its faults, the Republicans' tax bill is right to bump the breaks on tax credits for electric vehicles.

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  1. But what about trainz?

    1. Republicans are crashing the trainz, no survivors.

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  2. My VP owns a Tesla — Why should he get a tax break to have a rich luxury car? That entire tax is social engineering nonsense. The only thing keeping Tesla afloat is government decree via tax credits and mandates (other companies just pay money to Tesla to say the met quotas etc)

    1. Worse than the tax credits are the HOV lane stickers (so you can drive your electric luxury car in the carpool lane by yourself) and the mandatory “low emission vehicle” parking spots at all the shopping centers. There’s like 10 of them at the Walmart near me, usually filled up with gigantic gasoline guzzling SUVs. It gives me hope that people just ignore stupid laws.

    2. Tony and the like should be all for repealing a tax giveaway to the rich, right?

    3. Would it be better if he owned a Hummer and took a tax break for that? Which tax break is bigger social engineering nonsense? The tax break is the only thing keeping Hummers humming. (snicker) I don’t know which costs more, a Tesla or a Hummer, but If I could afford the tax break on one or the other I would take the tax break on the Tesla.

      1. Um, new Hummers have not been available for about 10 years now:

        If you drive a Hummer or a Tesla, there is a high probability that you are a douchebag though.

  3. the media have been bubbling over with hot takes on who wins and who loses

    Of course, there are proposals that would have no winners and losers…but how ya gonna buy votes without winners and losers?

    1. Don’t use your money. That is illegal.

  4. *Governor Moonbeam heading to safe space

    Shitty fact: Governor Moonbeam was governor from 1975-1983 for two terms and then was grandfathered in on a term limit law. He ran and won governor again in 2010 and is serving his 4th and final term until 2019.

    1. Shittier fact: when moonbeam is gone whoever replaces him will be worse. Brown is practically a conservative by California standards.

  5. This would obviously make it more difficult for California Republicans to vote for the tax realignment.

    1. “This would obviously make it more difficult for California Republicans to vote for the tax realignment.”

      Yeah, both of ’em.

  6. I’m old enough to remember when welfare queens drove Cadillacs.

  7. There is something deliciously karmic about God’s Own Prohibitionists ticking off Bernie and Franken’s pals by closing a tax loophole/subsidy/transfer payment to the rich. It is all the more hilarious since the Republican energy platform was specifically vociferous against subsidized toys that produce no GWh–much like the LP platform. It’s as dated as The Three Stooges, but serves as similar comedy since DemoGOP campaign funding is tax-subsidized. The Dems? Let ’em eat Greens!

    1. Babbling AGAIN, Hank.

  8. This could be good for Tesla, which will hit the cap for the number of vehicles that can get the tax credit based on reservations for the Model 3. Since the cap is per manufacturer, the tax credit would have started favouring competitors to Tesla, since GM and the others haven’t sold nearly as many electric cars as Tesla will have. Assuming that Tesla manages to solve its production issues.

  9. “For my money, the biggest loser is California Gov. Jerry Brown.”

    Couldn’t happen to a better twit. Can they make sure his choo-choo doesn’t get funded, too?

  10. Odd that CA is so in love with electric cars and subsidies for them when the state certainly has no surplus of electricity or money.

    1. But electricity comes out of the wall (?).

  11. Doesn’t the oil business receive some 5 BILLION a year in federal tax subsidies? That’s 5 thousand million a year. Oil gets subsidies to explore, drill, pump, refine, ship to your local gas station. (On a side note, drilling in ANWAR wouldn’t be profitable with those federal subsidies) After a 70% year over year increase in monthly sales (Forbes) for 2016 the total federal subsidy comes to about 1.2 billion. (160,000 vehicles @ $7,500 each) Also note not all of the 160,000 vehicles qualified for the maximum rebate with some only getting $2,500. The author chooses to pick the lesser of two evils to warn the reader of, while the oil companies continue to grab some 4 times of your federal tax money.

    1. Assuming your question is not rhetorical, please provide the answer. I cannot find a reliable source for the 5 billion figure.
      I am also having a problem determining how to arrive at a 70% year over year increase for a single year, 2016.

    2. Why is this relevant? Giant subsidies are generally bad. Pointing out an oil subsidy does not make the EV subsidy any better.

      1. Oil companies pay hundreds of billions of dollars in taxes, there are no “oil subsidies.” That’s the point.

  12. Outside of dense metro areas, electric cars still aren’t very practical for most. Yes, some have a range of 200-300 miles now, but that’s only if you are not running AC and stuck in traffic. This past summer, every electric car I saw had its windows down on 95 degree days with a very sweaty driver inside. And what happens when the electrical grid fails because of a hurricane (or earthquake in CA)?

  13. Electric cars are just not here. Maybe if the tax credit goes away (which in should in any case), it will incentivize the elec car industry to make the tech breakthrough needed for longer range that will bring elec cars to mainstream.
    Very telling that half of all elec cars are in CA.

    1. Yet, there are only 150,000 electric cars in Cali (out of 35 million cars total). My guess is that they aren’t selling very many outside of the Bay Area, in part because few other than tech geeks can afford them.

      But if you take away the gov’t subsidies, Elon Musk will lose half his net worth, or more!

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