Issue Brief

Electric Vehicles

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Summary

Battery technology improvements, declining battery costs, and significant government incentives are driving increased adoption of electric vehicles (EVs) nationwide. The Energy Information Administration anticipates that EV sales will reach 12 percent of new passenger vehicle sales by 2050. This “electrification” of the transportation sector is expected to lead to reduced emissions, economic growth (from investments in EV technologies), and the enhancement of America’s energy security through the diversification of transportation fuels. EVs may also be an asset to the grid through vehicle-grid integration technologies, including by absorbing excess generation from renewable energy resources, curtailing charging during peak hours, and even transferring power back to the grid if needed. Public power utilities are working with their communities to enable greater EV adoption through the development of charging infrastructure and EV customer programs and investment in smart grid technologies to manage EV charging. The American Public Power Association (APPA or Association) supports policies to promote the adoption of EVs and the ability for public power utilities to provide EV-related services to their customers.

 

Background

The Internal Revenue Code includes several provisions to promote EVs. The Alternative Fuel Vehicle Refueling Property Credit (26 U.S.C. 30C) provides a tax credit equal to 30 percent of the cost of installing alternative fuel vehicle refueling infrastructure, including EV recharging. The credit is capped at $30,000 for a business and $1,000 for an individual. This credit was created by the Energy Policy Act of 2005 but expired for installations after December 31, 2017. The New Qualified Plug-in Electric Drive Motor Vehicles Credit (26 U.S.C. 30D) provides a tax credit for the purchase of a new plug-in electric vehicle. Depending on the vehicle’s battery capacity, the credit is worth at least $2,500, but no more than $7,500. The credit was created in the Energy Improvement and Extension Act of 2008 and is phased out for any vehicle manufactured by a manufacturer that has sold 200,000 or more qualifying EVs. In the case of a tax-exempt entity that cannot make use of these tax credits, such as a public power utility, the tax credits instead can be claimed by the seller of the EV.

Additionally, the Fixing America’s Surface Transportation (FAST) Act of 2015 included several measures to accelerate the growth of the EV market. One provision directed the Department of Transportation (DOT) to create corridor maps to identify “near- and long-term need for, and location of, electric vehicle charging infrastructure… across the United States.” In November 2016, DOT released a map of 55 routes that will serve as the basis for a national network of alternative-fuel corridors, spanning 35 states and nearly 85,000 miles.
 

Congressional Action

Several bills intended to further encourage EV purchase and EV infrastructure investments have been introduced in the 116th Congress. Representative Peter Welch (D-VT) and Senator Jeff Merkley (D-OR) introduced the Electric CARS Act of 2019 (H.R. 2042/S. 993) to extend the refueling property tax credit through 2028. Likewise, House Ways & Means Committee member Dan Kildee (D-MI) and Senate Finance Committee member Debbie Stabenow (D-MI) introduced the Driving America Forward Act (H.R. 2256/S. 1094), which would allow an additional 400,000 vehicles per manufacturer to be eligible for a credit of up to $7,000 before the credit begins to phase out. Senator Tom Carper (D-DE) and Representative Mark 

DeSaulnier (D-CA) introduced the Clean Corridors Act of 2019 (S. 674/H.R. 2616), which would provide grant funding for the installation of electric vehicle charging stations and hydrogen fueling infrastructure along designated corridors across the National Highway System. Finally, the House Ways & Means Committee has approved H.R. 3301, the Taxpayer Certainty and Disaster Relief Act, which would extend the refueling property tax credit through December 2020. Comparable legislation extending the refueling property tax credit through December 2019 (S. 617, the Tax Extenders and Disaster Relief Act) has been introduced in the Senate by Finance Committee Chairman Charles Grassley (R-IA) and Ranking Member Ron Wyden (D-OR), but has not been acted on by the committee.

Conversely, Representative Jason Smith (R-MO) and Senator John Barrasso (R-WY) introduced the Fairness for Every Driver Act (H.R. 1027/S. 343), which would end the plug-in vehicle tax credit and instead impose a new user fee on alternative fuel vehicles that do not purchase gasoline and therefore do not pay the gasoline taxes that finance the Highway Trust Fund.

 

American Public Power Association Position

Public power utilities are committed to providing their communities with the infrastructure and programs needed to support increased EV adoption. Insofar as Congress seeks to encourage the use of EVs, it should ensure that any such incentives are available to public power utilities and their customers. Public power supports S. 674/H.R. 2616, the Clean Corridors Act of 2019, because it would allow public power utilities to receive federal grants to install EV charging stations adjacent to established routes.