U.S. Legislative News

Members of Congress Begin Push for EV Tax Credit Reform Legislation

Representative Peter Welch (D-Vt.) and Senator Jeff Merkley (D-Ore.) introduced the Electric CARS Act of 2019 (H.R.2042/S.993), on April 2. The legislation would remove the 200,000 per manufacturer vehicle cap on the new electric vehicle tax credit and extends the incentive until 2029. The bill also renews and extends the alternative motor vehicle credit and the alternative fuel infrastructure credit for 10 years. The legislation represents an ambitious approach to reforming the credit, given that there are other members of Congress seeking to eliminate the credit altogether.

Another EV tax credit-related piece of legislation is expected to be introduced this week by Sens. Debbie Stabenow (D-Mich.) and Lamar Alexander (R-Tenn.), which will address the issue of manufacturers who have already or are soon to hit the 200,000-vehicle limit. The bipartisan bill has broad support from stakeholders within the automotive industry, and it would add additional units on the existing per-manufacturer vehicle cap. The bill is being viewed as a short-term solution to the cap issues facing manufacturers including GM and TESLA who are set to see the credit phased out by the end of 2019. Without a near-term solution to the tax credit cap, some speculate that the position of the United States as a global leader in this growing industry could be jeopardized.

The bill is being endorsed by NAFA along with a wide range of interests such as the Alliance for Automobile Manufacturers, the Electric Drive Transportation Association, and the Edison Electric Institute. NAFA is working with members of the EV Drive Coalition to generate additional support for the legislation.

President Threatens Tariffs on Mexican Auto Imports

On Friday, April 5, President Trump said that 25 percent tariffs on automobiles made in Mexico could be imposed if the country does not continue to help reduce the number of illegal border crossings on the U.S. southern border. This statement came after the administration softened its position on the potential closure of the U.S.-Mexico border. The 25 percent tariffs on automobiles imported from Mexico would potentially supersede the non-tariff agreements in the United States-Mexico-Canada Agreement (USMCA), which has yet to be ratified by legislatures in the U.S., Mexico, or Canada. The threat of tariffs could further complicate the ratification process, which is also being bogged down by issues regarding Mexico’s current labor laws.

The auto industry’s supply chain is highly integrated between the U.S. and Mexico, with auto parts and automobiles regularly going back and forth between the countries. Tariffs would potentially have a substantial impact on the vehicle costs for both foreign and domestic manufacturers. The auto industry and many other stakeholders have strongly opposed the administration’s past threats to impose auto tariffs. Fleets would suffer from the collateral impacts of tariffs on imported autos and auto parts, as increased production costs are regularly passed down to consumers. NAFA is continuing to monitor any actions that potentially impact the auto industry and consequently fleets.

Senate Bill to Block Administration’s Action on Fuel Economy Standards

Sens. Ed Markey (D-Mass.), Diane Feinstein (D-Calif.), and Kamala Harris (D-Calif.) introduced a bill, the Greener Air Standards Mean Our National Security, Environment, and Youth (GAS MONEY) Saved Act (S.1022), to block the EPA and the National Highway Traffic and Safety Administration (NHTSA) from rolling back the 2012 fuel economy and vehicle greenhouse gas emission (GHG) standards rule.

The EPA proposed The Safer Affordable Fuel Efficient (SAFE) Vehicles rule in August 2018, which would cap the corporate average fuel economy (CAFE) GHG standard requirements at a 37 mpg average, post-2020. The previous Administration’s rule would have established a 47 mpg average post-2020.

Several automakers have expressed concerns about a potential patchwork of GHG standards in different states if there is not an established national standard. NAFA supports the move towards increased sustainability and believes that a unified national standard helps automakers maintain prices on autos and auto parts, which is extremely important for fleets as they consider a vehicle’s total cost of ownership.

AV Bill Talks Continue

Members of the relevant House and Senate Committees from both sides of the political aisle have been in recent talks over what path forward to take on autonomous vehicle (AV) legislation. Sens. John Thune (R-S.D.) and Gary Peters (D-Mich.) introduced the AV START Act in the last session of Congress but were not able to advance the legislation. They are delaying reintroduction of the legislation in the Senate until they have a better idea of what type of bill would be acceptable for lawmakers in the House.

There is a growing consensus on the need for a federal regulatory framework for autonomous vehicle development and deployment, but lawmakers have yet to agree on the specifics of a deal. One likely path for an AV bill could be an upcoming surface transportation reauthorization package, rather than a standalone bill that could face more significant opposition. NAFA supports the development of standards that ensure public safety regarding AVs, as technology development is currently far outpacing regulatory oversight.