GM and Ford seek longer R&D tax credit period

A tax credit that makes it more affordable for American carmakers and companies in many other industries throughout the U.S. to invest in their respective research and development cycles expired at the end of 2007. The bill that would have reinstated it failed to pass the Senate by 10 votes yesterday, and now a broad coalition that includes GM and Ford has joined together to urge the Senate to ensure the credit is a part of whatever new tax bill is passed.

The Detroit 3 spend billions of dollars annually on R&D projects. The joint letter submitted to the Senate on Tuesday by GM and Ford warns that failure to extend the tax credit could force the companies to bring their work on renewable energy and improved efficiency to a halt, reports The Detroit News. Such a move could negatively impact a large number of companies that support the Detroit 3 as well as the carmakers themselves.

GM, for example, has a very close relationship with both Coskata and Mascoma, two cellulosic ethanol production firms. Ford recently became the first carmaker to join the Climate Registry, although earlier this year it was put on Conde Naste's Toxic Ten list of corporate polluters. Regardless of whether the companies actually pull out of their R&D funding and whether that pull out causes a cascade of problems for the related industries, it's certain the loss of the tax credit will only add to the pain caused by the carmakers' heavily slumping retail sales if it's not reinstated soon.