Proposed elimination of federal electric vehicle tax credit would 'dramatically' impact adoption rate in Hawaii

This story appeared in the Pacific Business News on Monday, November 6th

Hawaii’s car dealerships could see a dramatic drop in electric vehicle sales should the GOP’s tax plan be adopted in its current form.

As part of their federal tax reform bill, House Republicans propose the elimination of the $7,500 credit for the purchase of EVs.

“If the federal tax credit was to be eliminated, it would have a dramatic effect on EV adoption,” Dave Rolf, the executive director of the Hawaii Automobile Dealers' Association, told Pacific Business News. “When those credits stop, the sales of the product drop dramatically.”

Rolf pointed to the example of China, where the reduction of government subsidies has led to a significant drop in EV sales earlier this year. Global financial services company UBS predicted this May that sales growth of new EVs in China, which includes fully electric and plug-in hybrid cars, would slow to 20 percent in 2017. Last year, the country saw a growth in EV sales of 63 percent.

While the GOP’s tax plan is only a proposal at the moment, auto manufacturers are mobilizing to keep the credit in place. Domestic and international car companies are betting heavily on EVs and have announced large investments in the expansion of the technology. While most big manufacturers don’t yet rely on EVs for their overall sales, the elimination of the tax credit could hurt the technology's adoption rate.

“The federal tax credit certainly does encourage EV adoption,” Rolf said. “The credit has been in place for some time and serves as a bridge that encourages electric vehicle adoption and auto manufacturers to continue to develop EVs.”

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