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Obama Budget to Offer $7,500 Electric-Car Tax Credit Through Dealerships

U.S. President Barack Obama’s administration will propose that consumers receive a $7,500 tax credit for electric cars at the dealership, reducing the sticker price, an Energy Department official said.

The initiative will be included in the president’s budget next week, David Sandalow, assistant secretary for policy and international affairs, said on a conference call with reporters today.

Consumers who have used hybrid- and electric-vehicle credits have received the benefits when they filed their tax returns. The administration wants to make the cars more affordable at the point of sale, in the same way the 2009 “Cash for Clunkers” program worked, Sandalow said.

“The current credit is going to be reformed so it’s claimable by dealers or others,” Sandalow said. “There will be clear requirements to ensure the benefit is passed onto the consumer.”

The administration will also propose grants for as many as 30 communities to build infrastructure to recharge electric vehicles, Sandalow said. The president’s budget will also include new research and development investments in electric drive, battery and storage technologies, he said.

Tesla Shares

Tesla Motors Inc., an electric-car maker backed by Toyota Motor Corp. and Daimler AG, rose $1.42, or 6.2 percent, to $24.49 at 4 p.m. New York time in Nasdaq Stock Market trading. A123 Systems Inc., a U.S. battery maker, rose 61 cents, or 6.6 percent, to $9.92.

J.D. Power and Associates, a research company in Troy, Michigan, projected last month that under current market conditions, there would be 750,000 plug-in hybrid vehicles like General Motors Co.’s Chevrolet Volt and battery-electric cars like Nissan Motor Co.’s Leaf by 2015.

GM, with about 24 percent of the electric-vehicle market, and Nissan will be the winners, because they’re already selling the cars, said Michael Omotoso, director of powertrain forecasting at J.D. Power. Honda Motor Co., which is at least a few years away from selling an electric model, will be among the losers, he said.

Volt, Leaf

The redesigned electric-vehicle tax credit would be available to both battery electrics like the Leaf and plug-in hybrids such as the Volt, Energy Department spokeswoman Jen Stutsman said in an e-mail. More specifics will be worked out with Congress, she said.

The budget proposal will be the latest effort to bolster tax credits aimed at bringing advanced technology cars to the U.S. sooner.

Representative Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee, said last month he backed legislation to enable automakers to claim the tax credits on 500,000 electric vehicles. The current cap is 200,000.

The Senate Energy and Natural Resources Committee last year approved legislation to create a $2 billion program with the goal of putting 400,000 electric cars on the road in three years. The Senate didn’t vote on the measure.

The Energy Department released a report on the pledge that the president made in the State of the Union address to have 1 million electric vehicles on the road by 2015.

The current market outlook suggests that while the goal is ambitious, it is achievable, according to the report. The auto industry will have enough manufacturing capacity, it said. Additional steps are needed to help companies develop new technology, reduce costs and spur consumer demand, it said.

To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net.

To contact the editor responsible for this story: Bernie Kohn at Bkohn2@bloomberg.net.

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