Lawmakers Seek to Increase the Number of Electric Vehicles Eligible for Federal Tax Credit

On Wednesday, U.S. Representative Sander Levin (D-MI) proposed legislation in the House of Representatives that would raise the number of alternative fuel vehicles eligible for the $7,500 federal tax credit from the current 200,000 per manufacture to 500,000 per manufacturer.

His brother, Senator Carl Levin (D-MI), intends to introduce a similar bill in the Senate.

The introduction of Rep. Levin’s bill came just one day after the State of the Union speech in which President Obama reiterated his goal of putting one million alternative-fuel powered vehicles on the nation’s roads within the next four years.

The federal tax credit, which was created as part of the federal Recovery Act in early 2009, is currently available on only five vehicles; the Tesla Roadster, Nissan Leaf, Chevrolet Volt, Wheego LiFe and CODA sedan. Under current law, rebate amounts are phased out over time after 200,000 of each model has been sold.

In a statement issued today, Rep. Sander Levin said, “Green vehicles represent the vanguard of automotive innovation, but they have to be economical for consumers and profitable for manufacturers. Raising the cap on this credit will help carmakers reach the demand and production scale necessary for long-term viability.”

General Motors Company has previously expressed its concern that the current 200,000 unit cap could hurt sales of its Chevrolet Volt once the rebate amounts begin being phased out. Without the tax credit, the sticker price for the Volt is $41,000, including delivery.

According to the Wheego Web site, the base price for its 2011 two-seat, plug-in electric Wheego Whip LiFe model is $33,995. Air conditioning is optional and increases the price by $1,995. The federal tax credit lowers the price of an air conditioned unit down to $26,495. The Wheego is powered by a 115 volt Lithium battery pack and reportedly has a “real world driving range” of approximately 100 miles.

The Obama administration has also expressed its desire to offer the $7,500 as a rebate instead of the current tax credit. Doing so would allow buyers to apply the funds directly to the new car purchases, which would theoretically lead to an increase in sales of all-electric and hybrid models.

To stimulate research and development of electric drivetrain and battery technology, President Obama has pledged to increase federal grants by 30 percent. In Tuesday’s State of the Union speech, the president said, “With more research and incentives, we can break our dependence on oil with bio-fuels, and become the first country to have a million electric vehicles on the road by 2015.”

President Obama has also proposed additional spending to develop the infrastructure needed to support electric vehicles, including up to $300 million in grants to 30 metropolitan areas to be used for the conversion of municipal fleets and the construction of public charging stations.

To heighten public awareness, Vice President visited Indianapolis-based Ener1, Incorporated on Wednesday. Ener1 was the recipient of $118.5 million in federal grants to expand their production of electric batteries for all-electric and plug-in hybrid vehicles. According to the administration, the grant money allowed the company to add 120 new workers at its Indianapolis production plant in 2010.

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