Obama 2012 Budget Proposes Higher Tax Credit For Plug-In Cars

Follow John

Barack Obama

Barack Obama

Enlarge Photo

Two days ago, President Barack Obama released his proposed U.S. government budget for the fiscal year starting in October.

And in it, he followed through on a promise from his State of the Union address last month, by proposing to cut up to $4 billion in subsidies to the oil and gas industry.

The budget also suggested that the tax credit for purchase of an electric vehicle be raised from its current $7,500 to $10,000.

Obama's $3.8 trillion budget proposal was immediately dismissed by the Republican Party as a "campaign document," in the words of Senator Mitch McConnell (R-KY). It has little chance of being adopted in its current form.

Obama has called for a total of 1 million plug-in vehicles on U.S. roads by 2015, though that goal is viewed as a stretch by most industry analysts. The proposed budget repeats that goal.

Other energy-related goals included cutting 20 percent from energy use in buildings by 2020, cutting oil imports by one-third by 2025, and requiring utilities to produce 80 percent of their power from low- or zero-carbon sources by 2035.

2012 Chevrolet Volt

2012 Chevrolet Volt

Enlarge Photo

Last year, in their first year of sales, roughly 17,000 plug-in vehicles were sold in the U.S. market. Sales of both the Nissan Leaf and the Chevrolet Volt exceeded those of the Toyota Prius hybrid in 2000, its first year on the market.

The majority of electric-car buyers took advantage of the tax credit, which ranges from $2,500 to $7,500, depending on the size of the vehicle's battery pack.

The Leaf, the Volt, the Tesla Roadster, and the Fisker Karma are all eligible for the maximum credit, which applies to cars with battery packs of 16 kilowatt-hours or higher.

The upcoming 2012 Toyota Prius Plug-In Hybrid will qualify for the minimum credit, which requires a pack of at least 4 kWh.

Many advocates, including Obama, have suggested the credit should be turned into a purchase rebate that buyers receive days or weeks after their purchase. The current credit can take as long as 15 months to reduce the buyer's tax bill.

U.S. Capitol

U.S. Capitol

Enlarge Photo

At last month's Detroit Auto Show, Transportation Secretary Ray LaHood defended the plug-in tax credit, which has come under fire because it largely benefits wealthier car buyers who can afford the higher price of today's electric vehicles.

Critics suggest that early adopters in states like California would have bought plug-in cars even without the tax credit, especially models like the $109,000 Tesla Roadster and the $104,000 Fisker Karma.

Thus far, Congress has not approved a single Obama proposal for electric-car infrastructure or incentives.


Follow GreenCarReports on Facebook and Twitter.

Follow Us

Comments (6)
  1. He might be on to something because apparently EV pricing is a much bigger concern to buyers than range:


  2. The current tax credit only helps if you make over $50k with no other deductions. What is needed is a point of sale deduction.

  3. I agree but you sort of get the POS price reduction when opting for lease and then buying it out. A lot of LEAF buyers have done it (including myself) but then I didn't get $3K from my job since they don't give you money for leasing. The other option is to enable the unused credit to roll over. I only see the rich people with the bottom line $10K liability in any given year and this credit is not needed there...

  4. While Obama will never pass his budget in its prsent form, the rising price of gas is an NGO tax credit for electric car users.
    Today we're at $3.86 a gallon in California, and headed for $5 by summer.

  5. fix the problem and just throughing money at the problem does not sovle anything

  6. That’s $10,000 out of the taxpayers pocket right into the coffers of GM. If I wanted to invest in GM, I’d buy the stock thank you.

    No you say? The money goes to the buyer…… Nope – he just spent a net $30,000 for a car worth $30,000 if you believe in supply and demand economics. The market demanded 7,000 $30,000 Volts last year and GM supplied them. And don’t kid yourself, if the market demanded 12,000 Volts GM would have produced 12,000 Volts. And if the market would have demanded 3,000 $40,000 Volts, that’s how many would have been built.

    GM is selling Volts for $10,000 over market value. Guess whose balance sheet carries that $10,000 credit. And you know who carries the debit. As they say…..follow the money.

Commenting is closed for old articles.

Get FREE Dealer Quotes

From dealers near you

Find Green Cars


© 2015 Green Car Reports. All Rights Reserved. Green Car Reports is published by High Gear Media. Send us feedback. Stock photography by izmo, Inc.