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Electric vehicle tax credit would be bumped to $10,000 under US budget proposal

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The Obama administration aims to increase the maximum electric vehicle tax credit from $7,500 to $10,000 in its 2013 budget proposal.

 Chargepoint EV charging station stock 1024 2
Chargepoint EV charging station stock 1024 2

Electric vehicles still aren't selling as well as we'd hope in the US, but the administration is hoping to jump start demand with its recent budget proposal. President Obama and company want to bump the maximum tax credit for electric vehicles from $7,500 to $10,000 beginning in fiscal 2013, according to The Daily Caller.The subsidy is part of a broader initiative to shift incentives toward cleaner energy and improved efficiency, including objectives like doubling electricity output from clean energy sources by 2035, and reducing energy use in buildings by 20 percent by 2020.

The counterargument here is that at $57,400 for a base model Tesla Model S, or $102,000 for a Fisker Karma, for instance, EVs are cars for the wealthy — not exactly popular targets for tax breaks. That said, a $10,000 tax credit would put the $35,000 Nissan Leaf at the same price as a top of the line Honda Civic, which is hardly NBA superstar territory. Free market supporters also claim that any subsidy is counter-productive, and that this kind of intervention in the market distorts the true price of the vehicles, having a negative effect on GDP — to say nothing of the effect on the government's bottom line. As far as the credit’s effect on sales, if our math is right, sales of plug-in vehicles will need to grow by 143 percent each year in order for the President to reach his goal of a million on the road by 2015. If the government’s serious about fostering that kind of EV adoption, it might take a little more than a $2,500 tax credit.