Toyota, Ford, GM pen letter to US Senate to lift cap on EV tax credit

Major automakers in the US including Toyota, Ford, Stellantis and General Motors (GM) have written a letter to the US leaders of the Senate and House of Representatives, requesting them to lift the cap on how many people can receive tax credits for buying a hybrid or fully electric vehicles. At present, number of tax credits allowed per company are capped at 200,000, with GM and Tesla having already reached the cap and Toyota close to it.

Chief executives of these companies have asked for EV tax credits to be extended to anyone who seeks to buy a qualified vehicle, until “the EV market is more mature". However, they did not give any estimates time frame for this. The letter read, “Eliminating the cap will incentivise consumer adoption of future electrified options and provide much-needed certainty to our customers."

The request to lift the cap on EV tax credits come as the US is witnessing a four-decade high inflation with energy prices being especially bad. Amidst this, consumers are finding it financially difficult to be able to purchase vehicles, especially electric ones.

The automakers also mentioned in the letter that the EV tax credit has allowed them to offer more affordable cars to people, and has helped accelerate the adoption of battery-powered vehicles. They also noted that the recent economic conditions as well as supply chain constraints have raised the cost of manufacturing EVs and this has forced them to pass on the cost to car buyers, who are already dealing with inflationary issues.

For example, Toyota's plug-in RAV4 Prime small SUV, offering 42 miles of electric range, earns the buyer a $7,500 EV tax credit, the largest available. The Prius Prime plug-in, offering 25 miles of electric range, gets $4,500.

(with inputs from AP)