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Driving America Forward Act seeks to juice up EV tax incentives

Tesla and GM will see their incentives boosted, too, even though they're already in the phase-out period.

2020 Kia Soul EV

A bill has a long way to go before it becomes law, but if the new Driving America Forward Act goes into effect, it could provide an extra boost for automakers who hope federal tax incentives will further advance EV adoption.

A bipartisan group of US legislators intend to introduce legislation extending the EV tax credit, Reuters reports, citing a copy of the legislation it was shown prior to its official introduction in the legislature. The bill is sponsored by Democratic Sens. Debbie Stabenow and Gary Peters, Republican Sens. Lamar Alexander and Susan Collins, and Democratic Rep. Dan Kildee.

The crux of the Driving America Forward Act is an extension of the federal EV tax credit. It would allow automakers to hand out $7,000 tax credits for an additional 400,000 vehicles per automaker. This would be in addition to the 200,000 vehicles eligible for $7,500 credits allotted to each automaker. The bill also shortens the phase-out period to nine months, while the current scheme has a 15-month phase-out period. Furthermore, it would extend a tax credit for hydrogen fuel-cell vehicles through 2028.

Tesla and GM are likely quite excited at the prospect of offering better incentives to potential buyers.


The price tag for this bill is estimated at $11.4 billion, nearly all of which will go toward the EV tax credit extensions, according to Reuters. As with the current tax-credit scheme, it's worth noting that this is not a one-time, point-of-sale vehicle discount. Rather, it's a dollar-for-dollar reduction of a person's federal tax liability. People who do not pay that much in federal taxes will not realize the credit's full value.

This could be big news for Tesla and GM, the two automakers currently in the phase-out period. Tesla's tax credit dropped to $3,750 at the beginning of 2019 and will end later this year, while GM's tax credit dropped to $3,750 on April 1. Under the new legislation, those automakers would have an extra 400,000 vehicles each that would be eligible for $7,000 tax credits.

There's no guarantee that the Driving America Forward Act will become law, and in fact, legislators have also tried to kill the credit on occasion. Last October, Sen. John Barrasso, a Republican from Wyoming, sought to nix the credit and replace it with an EV tax for road repairs. Eight days later, Sen. Dean Heller, a Republican from Nevada, introduced legislation that would maintain the EV tax credit, but it would replace the quantity-based phase-out with unlimited $7,500 credits that would come to a full stop in 2022.