MATSUI, CASTEN REINTRODUCE LEGISLATION TO INCENTIVIZE EFFICIENT VEHICLE PURCHASES
WASHINGTON, D.C. – Today, CongresswomanDoris Matsui (CA-07) and Congressman Sean Casten (IL-06) reintroduced the Vehicle Energy Performance Act (VEPA), legislation that will reduce the price of new vehicles with higher fuel efficiency.
“The Trump Administration is trying to drag this country back to the 1970s by gutting our vehicle pollution and fuel efficiency standards, but America isn’t going back,” said Congresswoman Matsui. “Now is the time to demand more from our cars. The most efficient gas 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.”
“Roughly one-quarter of all greenhouse gas emissions from the United States come from the transportation sector, especially cars and trucks,” said Congressman Casten. “It’s more important than ever to incentivize vehicles that not only help reduce those emissions, but can also go the extra mile and extend trips between visits to the gas pump. This legislation is a win-win for consumers hoping to save money on fuel and help the environment at the same time.”
The Vehicle Energy Performance Act of (VEPA) will establish a point-of-sale consumer tax credit for new vehicles with higher-than-average fuel efficiency, paid for with a fee on manufacturers for each new vehicle sold with lower-than-average fuel efficiency. The credit is technology neutral, meaning electric vehicles, hybrids, plug-in hybrids, and standard internal combustion engine cars will all be assessed and compared by an equivalent measure of fuel efficiency.
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.
How it Works
Under VEPA, by November 1 of each year, each vehicle manufacturer will report the fuel efficiency, in miles per gallon-gasoline equivalent (MPGe), for each model sold in the United States 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, 2026, and every year thereafter, the IRS will publish the median fuel efficiency and the best fuel efficiency of any vehicle sold during the previous year. Vehicles with the best fuel efficiency will get 100% of the $5000 credit, vehicles with the median fuel efficiency 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 fuel efficiency, vehicles with low fuel efficiency 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.
Full text of the bill is available HERE.
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