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- It’s not law yet, not by a long shot, but things are happening in Congress that could add up to $5000 to the current $7500 federal tax credit for electric vehicles.
- The bill would add $2500 to the credit for EVs made in the U.S., and another $2500 if it it was made by union workers.
- The current 200,000-vehicle limit per automaker would also disappear—helping GM and Tesla the most—in favor of an overall phaseout once more than half the vehicles sold in the U.S. are electric.
The current federal tax credit for someone buying an electric vehicle has a maximum value of $7500. A new piece of legislation called “Clean Energy for America” that passed the U.S. Senate Finance Committee this week would raise that to $12,500, but it’s not just a straightforward increase.
The legislation, if passed into law, would keep the $7500 level in place but would then add $2500 if the EV was assembled in the U.S. and another $2500 if it was made at plants represented by a labor union. The bill also sets a maximum MSRP for qualifying EVs at $80,000. The current EV tax credit has no price limits.
General Motors and Tesla could benefit more than other automakers from the changes this bill makes. The bill removes the trigger that phases out the tax credit for buyers of vehicles made by automakers that have sold over 200,000 EVs. Only GM and Tesla have reached that level today.
The new bill does away with OEM designations and instead phases out the tax credit altogether over three years once at least 50 percent of the passenger vehicles sold in the U.S. are EVs. A Congressional estimate puts the cost of the bill at $31.6 billion over 10 years.
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Sen. Debbie Stabenow (D-MI) sponsored the bill. She said she believes increasing the tax credit would be good for the working class. “I think in rural Michigan, where folks are buying F-150 trucks and Chevy Silverados, or maybe they’re getting a new Jeep, or whatever, all those are about to be electric. All of them,” Stabenow said in a video posted to Twitter. “Based on what happened with the announcement of the F-150 truck and the thousands of pre-sales they have right now, not from wealthy people, we’re talking about working folks that want a pickup truck, that are very excited about the idea that they’re going to be able to get better mileage, they’re going to save money, they’re going to have the opportunity to buy something that is cleaner and electric . . . We want people, if they’re buying a large vehicle, for it to be electric.”
The bill includes other green energy tax incentives and provisions that reduce what Reuters calls “many fossil-fuel tax provisions.” Stabenow said that her bill promotes EVs in a way similar to how Congress gave the oil industry tax incentives in the past.”We picked a winner and they won—100 years ago,” Stabenow told Reuters. “And now we’re just trying to level the playing field.”
The bill passed the Finance Committee on a 14-14 tie vote. The bill still needs the approval of the full Senate and the House, as well as President Biden’s signature, before it would become law.
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