The House and Senate agreed Thursday to scrap a proposal eliminating a large tax credit the electric vehicle market and other green energy companies rely on to keep the fledgling industry afloat.
Lawmakers spared a $7,500 electric-vehicle tax credit and a wind production tax credit that Republicans nixed to balance out the hefty tax bill, according to a Bloomberg report Thursday. The Senate’s version of the bill does not include the provision.
Another provision potentially affecting the industry has not yet been eliminated. The so-called Base Erosion Anti-Abuse Tax provision (BEAT) could erode the value of solar and wind credits and dry up a $12 billion tax-equity market, according to McDermott Will & Emery, a law firm that specializes in international tax trade.
Republican Sen. John Thune of South Dakota, who serves on the Senate tax-writing committee, argues the House and Senate bill will work to address BEAT.
“We’re working on it,” he said in an interview earlier this month. “Nothing’s finalized yet but we recognize that is a problem created by the BEAT and we are trying to ensure those types of projects aren’t adversely affected.”
Tesla, a Silicon Valley automaker that relies heavily on the electric vehicle tax credit, saw its stock tumble from about $321 per share to roughly $296 after Republicans called for the immediate repeal of the tax credit.
Making matters worse, the draft emerged shortly after Tesla announced its worst ever third quarter as the company admitted to not meeting production targets for the new Model 3 car — CEO Elon Musk managed to make just 220 of the 1,500 he promised.
The tax credit drives most of Tesla’s sales, analysts argue. Electric car sales slumped badly in Georgia, going from 1,400 a month to just 100 a month, after the state shuttered its $5,000 credit. Other countries have eliminated electric vehicle credits with similar results.
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