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Tax Reform Could Stall Electric Vehicle Sales in Hawai‘i

Richard Kelly / Flickr
Richard Kelly / Flickr

As Republicans on Capitol Hill refine their plans on tax reform, one point under consideration is eliminating a tax credit for electric vehicles. And that would be likely to have a broad impact here in Hawai‘i. We get more on that story from Pacific Business News editor in chief A. Kam Napier.  

Currently the federal government extends a tax credit of $7,500 to anyone purchasing an electric vehicle. As the GOP prepares its plans for tax reforms, it has proposed eliminating that credit.

According to Dave Rolf, executive director of the Hawaii Automobile Dealers Association, doing so could dramatically slow Hawaii’s adoption of electric vehicles. He cites the example of China where ending electric vehicle subsidies reduced the growth rate of EV adoption from 63 percent to 20 percent.

About half of the dealerships represented by HADA sell electric vehicles. However, even with the subsidy, EV adoption in the Islands has been relatively slow. Sales of such vehicles peaked in 2014, with 3,652 new EVs registered and have declined since. In 2016, according to HADA data, just 1.8 percent of new vehicle registrations were for hybrid or fully electric vehicles. Just under 60,000 new vehicles of all kinds are registered annually in Hawaii.

Rolf says that HADA has taken no position on EV subsidies, whether federal or local, in part because a high stimulus, if withdrawn, can be very disruptive to the market. The association would prefer to see adoption driven by consumer demand.

A. Kam Napier is the editor-in-chief of Pacific Business News.
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