MATSUI, CASTEN INTRODUCE LEGISLATION TO INCENTIVIZE EFFICIENT VEHICLE PURCHASES

WASHINGTON, D.C. - Congresswoman Doris Matsui (CA-07) and Congressman Sean Casten (IL-06) introduced the Vehicle Energy Performance Act (VEPA) to incentivize the purchase of new vehicles with better-than-average energy performance.

"We can and we should demand more from our cars," said Congresswoman Matsui. "The most efficient vehicles on the market are getting more than 50 miles to the gallon, and electric vehicles can get the electricity equivalent of more than 130mpg. However, many Americans are getting less than 25 miles to the gallon and paying to fill up their tank twice as often. This bill would change the equation, incentivizing automakers to offer more and better fuel-efficient options, and that means more money in your pocket."

"This legislation is a win-win for consumers hoping to save money at the gas pump and help the environment at the same time," said Congressman Casten. "As vehicle emissions continue to contribute to global warming, it's more important than ever to incentivize vehicles that can go the extra mile."

"Shifting to cleaner vehicles is critical to meet our climate goals," said Steven Nadel, executive director of the American Council for an Energy-Efficient Economy. "The trend toward larger, less efficient vehicles has hurt families' pocketbooks with higher fueling costs. This bill would wisely incentivize purchasers of gas, hybrid, and electric vehicles to choose the more efficient options, helping to shift each part of the vehicle market in a positive direction."

The Vehicle Energy Performance Act of 2024 (VEPA) will establish a tax credit for consumers who buy new vehicles with higher-than-average energy performance and impose a fee on manufacturers of new vehicles with lower-than-average energy performance.

The energy performance, or efficiency, of a vehicle closely correlates to how much pollution the vehicle emits, so this legislation will incentivize cleaner cars, while also saving drivers money on fuel costs. The tax credit is technology-neutral and the size of the credit increases with the efficiency of the vehicle, meaning that an efficient gas-powered car would receive a small credit, while a more efficient hybrid would receive a larger credit, and the most efficient electric vehicles would receive the largest credit.

This legislation generates cost savings on both ends for consumers. The tax credit creates financial incentives for consumers to purchase energy-efficient vehicles, and drivers spend less at the pump because of better fuel efficiency.

Text of the legislation can be found here.

How it Works

Under VEPA, by November 1 of each year, each vehicle manufacturer will report the "vehicle energy performance," in miles per gallon-gasoline equivalent (MPGe), for each model sold in the United States during the Model Year (MY), and the number of vehicles of each model that it has sold that year. The use of MPGe as a metric is "technology neutral," meaning that EVs, plug-in hybrids, hybrids, and standard internal combustion engine cars will all be assessed by the same measure of vehicle energy performance.

By December 1, 2025, and every year thereafter, the IRS will publish the median vehicle energy performance of vehicles sold and the vehicle energy performance of the best-performing vehicle during the previous model year. Vehicles with the best vehicle energy performance will get 100% of the $5000 credit, vehicles with the median vehicle energy performance will get $0, and every 1% above the median will increase the credit by approximately $50.

If the program were in place today, a buyer would receive a $5000 tax credit for a Hyundai Ioniq 6, almost $2000 for the Ford Lightning EV pickup truck, and over $1000 for the Toyota Prius hybrid.

Using the same data on median vehicle energy performance, vehicles with low vehicle energy performance will be subject to a fee of approximately $50 for every 1% below the median, with the largest fee estimated to be less than $1000. This fee will partly offset the cost to the Treasury of the tax credit.

Unlike the tax credit, which will go to the consumer, the fee will be paid by the manufacturer.

# # #

Public link

Please use the above public link if you want to share this noodl on another website.