The proposed elimination of $7,500 tax credit could end up as a major setback for electric vehicle sales. Majority of automobile manufacturers are already offering electric cars with very low margin and market leader Tesla Motors is reporting loss each quarter. Tesla could face major trouble with sales if the government decides to eliminate tax credits.

The new tax plan rolled out by House Republicans would repeal $7,500 tax credits on electric vehicles after 2017 tax year. Automobile sector analysts believe that Nissan Leaf and Chevrolet Bolt would face much larger impact of elimination of tax credits. The impact will also be seen on Tesla sales but as the company deals in higher price range, the impact could be lower compared to affordable electric car segment.

Automobile companies have been shying away from investing in electric and green technologies. In order to push forward R&D and investments in electric vehicle segment, government subsidies play an important role.

Commenting on the issue, the Electric Drive Transportation Association said, "Today, the House Ways and Means Committee released tax reform legislation that includes repeal of the Section 30D Plug-in Electric Drive Vehicle tax credit."

General Motors released a statement, “Tax credits are an important customer benefit that can help accelerate the acceptance of electric vehicles. Because General Motors believes in an all-electric future, we will work with Congress to explore ways to maintain this incentive.”