×

UPDATE 1-U.S. House Republicans propose to scrap $7,500 electric vehicle credit

credit@ (Adds reaction, background)

WASHINGTON, Nov 2 (Reuters) - House Republicans are proposing to eliminate a $7,500 tax credit for electric vehicles that could hurt automakers like General Motors Co, Tesla Inc and Nissan Motor Co that are selling larger numbers of vehicles, according to a summary seen by Reuters.

Current law allows automakers to use the credit that 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.

Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, a trade group representing GM, Toyota Motor Corp, Volkswagen AG 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.

Green energy groups blasted the Republicans' proposal.

"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.

Former President Barack Obama repeatedly proposed hiking the tax credit for electric vehicles to $10,000 and converting it to a point-of-sale rebate, but Congress failed to approve the measure.

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. It would also phase out the credit for residential energy-efficient projects and a credit for producing oil and gas from marginal wells.

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 is advertised as starting at around $35,000 but would jump to $42,500 without it. Critics say electric vehicle buyers tend to be wealthier than average Americans and do nod need subsidies.

(Reporting by David Shepardson; Editing by Nick Zieminski)