A key incentive spurring sales of electric cars and plug-in hybrids, the $7500 federal EV tax credit, is on the chopping block as part of a sweeping tax-reform proposal being tackled by Congress. And the timing couldn?t be much worse for automakers ramping up the development of electric vehicles as they clamber for a market foothold in the nine ZEV mandate states that have adopted California’s requirement to sell plug-in vehicles. 
The news has been jarring to an industry that has been dependent on the tax credit to make electric vehicles cost competitive with?or closer in value to?gasoline-powered vehicles. Manufacturers are particularly eager to sell EVs because starting in 2018, a certain percentage of sales?not just in the Golden State but in Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Vermont?must be electric vehicles, plug-in hybrids, and/or hydrogen fuel-cell vehicles. Together, the ZEV-mandate states make up more than 40 percent of the U.S. new-vehicle market. The Plug-In Electric Drive Vehicle Credit, as the IRS calls it, predates the rise of today’s electric cars such as the Nissan Leaf and the Tesla Model S. The elimination of the EV tax credit might not be a mortal wound for California?s electric-vehicle market, which has reached 5 percent of total passenger-vehicle sales, but it could prove a challenging headwind for selling enough EVs in those other states.

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