In the wake of the recent Driving America Forward Act, once again the discussion about incentivising EVs is on the table. So, let’s have a look at how EV incentives really impact the EV market.

But, before diving into the European, American and Chinese EV market and incentives, let’s have a quick look at what is playing now in the US.

The Driving America Forward Act

Good news for electric car manufacturers in the US. The current tax credit scheme may be about to come to an end but a new bill is being discussed to extend the current federal EV tax credit to 400,000 cars produced up from the 200,000 cap today.
The Driving America Forward Act would grant each car manufacturer a $7,000 tax credit and by doing so will boost the EV sales of car manufacturers, including but not exclusively GM and Tesla, who would suffer a sales drop facing the diminishing tax credit. In addition, the hydrogen fuel cell credit would be extended as well through 2028.

Good to know, the existing EV tax credit was about $7,500 and will phase out over 15 months once a car manufacturer hits 200,000 cumulative EV sales. For instance, GM already hit its tax credit cut to $3,750 on 1 April, while Tesla’s tax credit fell to $3,750 on 1 January and will loose it entirely by the end of 2019.

However, while the bill is backed by major car manufacturers, such as GM, Tesla, Ford, Toyota, Fiat, Honda, BMW, Nisan and Volkswagen Group, not everyone is in favour of it. The White House proposed last month to immediately eliminate the $7,500 tax credit, while Sen. John Barrasso, a Republican who chairs the Environment and Public Works Committee, proposed a highway user fee on EVs to pay for road repairs and end the tax credit.

To incentivise or not?

Yet, the debate around incentivising EVs has a huge impact on the entire EV market. Moreover, various studies in various continents have shown the significant correlation between EV incentives and the EV market share.

Read the outlook of EV incentives in China and in the USA, and how they confirmed China as a leading market.

Read the outlook of EV incentives in Europe, and the correlation between the various incentives in the various countries and their reflection on the EV market.