FREEDOM Act to Offer Plug-in Vehicle Incentives
By EV World
Washington's Senator Maria Cantwell and Utah Senator Orrin Hatch introduced into the 111th Congress the Fuel Reduction using Electrons to End Dependence on the Mid-East (FREEDOM) Act of 2009.
Their bill, S271, would revise the 1986 Internal Revenue Code providing tax credits in a number of critical areas including manufacture, conversion and acquisition of plug-in electric vehicles, including conventional four-wheel, three-wheel and two-wheel vehicles, as well as low-speed neighborhood electric vehicles.
As the bill presently reads, 'qualified' manufacturing facilities that turn out either completed plug-in vehicles and/or components for those vehicles are 100 percent deductible if placed into service before January 1,2012. Similar facilities placed in service after this date, buy prior to January 1, 2014 are eligible to claim 50% of the cost of construction.
The bill further defines an 'eligible component' as "any battery, any electric motor or generator, or any power control unit" designed specifically for use on a qualifying EV.
Consumers would also benefit from the bill, starting with the provision that increases the allowable cap on the plug-in vehicles from 250,000 to half a million.
Plug-in conversion kits would now also qualify for up to a $4000 tax credit.
Perhaps the most controversial aspect of the bill is its provision for 2 and 3-wheeled EVs. Critics see this as opening the flood gates to cheap, Chinese-made vehicles like the ZAP Xebra; although it would also benefit breakthrough concepts like the Aptera.
On the plus side, for the first time, the bill makes allowances for these class of vehicles, which have previously been excluded from these types of incentives. On the flip side, there is opposition to including them at all.
Because the bill caps these vehicles at 50,000, opponents interpret this to mean the total number of four-wheeled, highway-capable vehicles drops from 500,000 to 450,000. Since most of these 2 and 3-wheel vehicles would be imports, the bill wouldn't necessarily benefit the handful of small, US manufacturers like NMG, Aptera and GEM.
To quote one observer, "Should the taxpayer funded Federal economic stimulus tax package benefit consumers of Chinese NEVs, ZAP Xebras and a whole slew of electric two wheeled imports, along with a few 'good guys' American companies like Aptera, NMG and GEM?
"To paraphrase Tom Friedman, is the EV world flat?"
The provision to lower the qualifying battery capacity also leaves open the door to the possibility that conventional hybrids might quality, a concern that would seem to be dealt with by requiring the vehicles to be plugged in, something no current OEM-build hybrid does, though vehicles like GM's Volt and Toyota Prius will have this capability by 2010.
Low-speed neighborhood electric vehicles would see their various qualifying credits sliced in half, along with the credit for battery capacity that drops from $417 per half kilowatt hour of battery capacity to $100.
The final provision in the bill provides tax incentives for "smart meters" and "smart grids," both essential for the development of an EV-centric infrastructure.
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