Legislative Affairs

The Environmental Protection Agency (EPA) recently proposed new emissions standards that would effectively require 67.5% of U.S. car sales be electric by 2032. New car and truck dealers are essential to sell and service EVs and have already invested $5 billion of their own capital in the tools, equipment, training, and recharging infrastructure which are critical to laying the foundation to move from early adopters to mass marketing EVs to the average consumer. Despite federal incentives, customers are not purchasing electric vehicles in the quantities required for automakers to meet these different government mandates. 

The current EPA proposal ignores real world consumer demand and as a result, goes too far, too fast. Consumers are not moving as fast as the proposed regulations, largely because the other changes needed to make EVs broadly attractive to consumers: affordability, a sufficient and reliable charging infrastructure, and acceptable charging speeds. A single national standard for achievable greenhouse gas regulations that leverages consumer demand is needed to produce the fleet turnover necessary to deliver environmental benefits. Language to prevent the EPA from spending money to finalize this mandate was included in the Fiscal Year 2024 House Interior-Environment Appropriations bill (H.R. 4821). Members of Congress are encouraged to sign letters to congressional leadership warning that unless the EPA creates a national greenhouse gas standard that is reasonable and achievable for all 50 states and stops attempting to ban the sale of gas-powered cars, Congress will need to step in. 
 

Under existing law, the Treasury Department has authority to allow businesses that utilize the last-in first out (LIFO) accounting extended time to replace inventory if a “major foreign trade interruption” makes inventory replacement difficult or impossible. Pandemic-related global disruptions and reduced auto production made it impossible for dealers to replenish new vehicle supply. Despite broad bipartisan support for Treasury’s use of its existing authority regarding vehicle inventory, Treasury declined as it believes additional legislative authority is needed. 

Under the “Supply Chain Disruptions Relief Act” (H.R. 700/S. 443) Congress would determine that the conditions necessary to grant additional time to replace vehicle inventories under existing law due to pandemic-related foreign trade interruptions have been met. As a result of supply chain disruptions beyond the dealers’ control, LIFO recapture triggered significant, unexpected tax liability that continues to harm many smaller, multi-generational family dealerships. Members of Congress should cosponsor the “Supply Chain Disruptions Relief Act” and urge House and Senate leadership to pass this technical and non-controversial legislation at the earliest opportunity.