March 12, 2019 / 8:03 PM / a month ago

Electric vehicle demand likely to drop if tax credit ends: U.S. official

FILE PHOTO: A charging port is seen on a Mercedes Benz EQC 400 4Matic electric vehicle at the Canadian International AutoShow in Toronto, Ontario, Canada, February 13, 2019. REUTERS/Mark Blinch

HOUSTON (Reuters) - Electric vehicle demand is likely to drop if the United States eliminates a tax credit worth up to $7,500 as President Donald Trump has proposed, a senior U.S. Transportation Department official said on Tuesday.

The White House said on Monday that nixing the credit, which phases out after companies hit 200,000 vehicles sold, could save taxpayers $2.5 billion over the next decade. Automakers have pushed for the credit to be extended.

“As you take away some of these incentives, demand will likely come down a bit,” Derek Kan, the Transportation Department’s under secretary of transportation for policy and a former Lyft Inc executive, said at the CERAWeek energy conference in Houston. “When you take away a tax credit, we know from basic economics demand will likely fall because the price is a little high.”

Reporting by Ernest Scheyder; Editing by David Gregorio

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