Tuesday, January 3, 2012

House Bill Proposes Repeal of Plug-In Vehicle Tax Credit

Published January 3, 2012

By Jeff Cobb

Earlier this month when U.S. Rep. Mike Kelly’s office was asked how he would accomplish his proposal to end the plug-in vehicle tax credit, his press secretary answered merely that he is “keeping his legislative options open.”

Well, as things have turned out, the Republican congressman's legislative option now has a name – H.R. 3768. The Dec. 30 bill proposes elimination of the $7,500 tax credit for buyers of all plug-in vehicles.

"This is not to say I don't support the development of electric cars," Kelly said in a December Op-Ed for USA Today. "I do, but not at taxpayer expense."

If you have previously noted the congressman – also a reportedly disgruntled GM dealer from Pennsylvania, north of Pittsburgh – you might have read he fired one of his employees at his Chevy dealership for consenting to bring in a Volt. Since then his dealership dropped out of the Volt program it had initially been a part of, and he is effectively trying to remove Volt sales incentives from every other Chevy dealer in the country as well.

Evidence of this has come from his using the Volt as a negative example in speaking before his congressional peers, and seeking other mainstream media avenues to make his strong views.

Kelly has been an ardent critic of some of GM’s initiatives, particularly after he was nearly forced to close his family’s Cadillac dealership during GM’s bankruptcy restructuring.

His bill, as reported yesterday by The Hill, is an answer to what he says is “lack of mainstream demand” for the Volt and other electric cars.

"The misuse of taxpayer dollars to promote the electric vehicle is emblematic of the Obama administration's overall misunderstanding, and ultimate manipulation, of the free market principles that undergird our economy," he said. "President Obama has become the 'Venture Capitalist in Chief,' gambling hard-earned taxpayer dollars in green projects and industries that are more politically than performance driven."

Kelly has also been pursuing answers from GM as to why it did not disclose the federal government's side-impact crash test fire in June, and has complained that only the upper crust are really taking advantage of the tax credit at the mainstream’s expense.

Kelly said the tax credit is "largely going to the affluent few who can actually afford to buy an electric car, which costs anywhere between $40,000 [Chevy Volt] to $97,000 [Fisker's Karma]."

Priming the plug-in pump yet needed

It has never been a secret that high-income households have been among the first to adopt GM's Voltec car.

The nuances involved in an automaker's launching disruptive technology in this economic and political climate have been many, and advocates have contended the whole picture is not nearly as cut-and-dried as critics like Kelly have asserted.

GM's plan to roll the vehicle out has been conservative, initially starting in only seven states. The company did accelerate roll out to all 50 U.S. states this year, and intends to produce 45,000 for the U.S. market this calendar year and 60,000 worldwide.

The Volt had to overcome several public relations hurdles in 2011 including criticism allegedly intended to obfuscate its benefits.

These extra smoke screens could not have helped considering a poll this year showed many mainstream buyers have not absorbed the necessary understanding to make informed decisions about plug-in or hybrid vehicles.

In short, it has been said more time will be required to prime the pump, mainstream acceptance is not expected at this stage, and incentives are a good way to ease the way toward more people opening their eyes to the value the Volt and all other plug-in vehicles actually present.

While some Volt enthusiasts advise against pitching the $39,995-plus MSRP Volt for its cost-benefit value, Kiplinger was able to demonstrate that within five years it could nearly pay back a $19,000 difference when compared to a Chevy Cruze.

Kiplinger''s analysis did factor in the $7,500 federal credit which those in favor of setting the stage to improve America's energy security have said is necessary and valid.

We shall see – perhaps as soon as a month or two – whether Kelly's efforts to end it gain traction.

There's little doubt that plug-in vehicle advocates will perceive it as short sighted, and somewhat concerning, as it's unclear at this stage whether the threat could indeed be carried out.

Yesterday we asked GM's Director of Policy and Washington Communications, Greg Martin, and he said Kelly does have the industry's attention.

"It's going to be a matter we're all going to watch closely. Every major automaker has a planned offering coming soon," Martin said. "So I think the tax credit could help accelerate the pace of these advanced-tech vehicles that collectively lessen our dependence on imported oil and also lessen the nation's environmental impact from fossil fuels."


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