US EV carmakers urge government to remove tax cap on electric car purchases

Major automakers are asking Congress to lift the limit on the number of people who can get tax credits for buying a hybrid or all-electric vehicle.

Currently, the number of tax credits allowed is limited to 2 lakh per company. General Motors and Tesla have already reached the limit and Toyota is close.

In a letter to the leaders of the US Senate and House of Representatives on Monday, the CEOs of Ford, Toyota, GM and Stellantis asked for tax credits for anyone wishing to purchase a qualified vehicle.

Automakers want the limit lifted until “the EV market is more mature,” they said, without giving a timetable.

“Lifting the limit will boost consumer adoption of future electric options and provide much-needed security for our customers and domestic workers,” the CEOs wrote.

The request comes as Americans are being squeezed financially from all sides by four decades of high inflation. Energy prices were particularly bad, with the average cost for a gallon of gas in the US crossing $5 (about Rs. 400) this weekend, according to the AAA auto club.

Automakers said Monday the tax credit has allowed them to offer more affordable cars to people, accelerating the adoption of EVs. However, the companies said recent economic conditions and supply chain constraints have increased the production costs of electric vehicles and that these costs must be passed on to car buyers who are already paying more for almost everything.

US President Joe Biden has been trying to keep supplies of materials needed to produce electric vehicles flowing as the nation transitions away from fossil fuels.

Biden invoked the Defense Production Act of 1950 in April to encourage production of lithium and other minerals essential to power electric vehicles.

Toyota’s plug-in RAV4 Prime small SUV with 42 miles of electric range earns the buyer a $7,500 (approximately Rs. 5,85,100) credit, the largest credit available. The Prius Prime plug-in, with a 25-mile electric range, is priced at $4,500 (about Rs. 3,51,000).

The letter was signed by Mary Barra, CEO of GM, Ted Ogawa, CEO of Toyota, Jim Farley, CEO of Ford and Carlos Tavares, CEO of Stellantis.

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