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House Republicans propose to scrap $7,500 electric vehicle credit

WASHINGTON (Reuters) - House Republicans are proposing to eliminate the $7,500 tax credit for electric vehicles, which could hurt automakers like General Motors Co, Tesla Inc and Nissan Motor Co, according to the bill made public on Thursday.

Current law allows automakers to use the credit, which phases out after an automaker hits 200,000 plug-in vehicles sold. Electric vehicles have expensive batteries that make them pricier than gasoline-powered vehicles.

Environmental groups and an auto industry trade group blasted the proposal, which would kick in at the end of this year. GM vowed to fight, saying the credits are “an important customer benefit that can help accelerate the acceptance of electric vehicles.” Tesla declined to comment.

Nissan said it supports continuing the tax credit and noted it has “made significant investments in the development of market-leading electric vehicles.”

Critics of the credit say electric vehicle buyers tend to be wealthier than average and do not need subsidies.

Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, a trade group representing GM, Toyota Motor Corp, Volkswagen AG VOWG_p.DE and others, said the change could hurt electric vehicle sales.

“The potential elimination of the federal electric vehicle tax credit will impact the choices of prospective buyers and make the electric vehicle mandate in 10 states - about a third of the market - even more difficult to meet,” Bergquist said.

“The EV tax credit repeal would cede U.S. leadership in clean vehicles, putting our companies at a competitive disadvantage and threatening jobs while costing drivers more at the pump and increasing pollution,” said Luke Tonachel, director of the National Resources Defense Council’s Clean Vehicles and Fuels Project.

Automakers have invested billions in electric vehicles and announced plans to shift significant production to plug-in models.

Former President Barack Obama unsuccessfully proposed hiking the tax credit for electric vehicles to $10,000 and converting it to a point-of-sale rebate.

GM shares fell 1.2 percent in late trading, while Tesla was down 7 percent after reporting earnings.

The House GOP plan also calls for repealing and phasing out other energy tax credits, including production and investment tax credit for solar, geothermal, fuel cell, wind energy and other clean energy projects.

Automakers face mandates from California and a dozen other states to produce a rising number of zero-emission vehicles and have said the credits are essential to meeting requirements.

GM’s electric Chevrolet Bolt starts around $30,000 including the tax credit but rises to $37,500 without it.

Reporting by David Shepardson; editing by Chizu Nomiyama and Dan Grebler