Planning to buy an electric car?Your net cost may depend on how successful GM lobbyists are
Back in 2008, to kickstart the EV business, Congress established a non-refundable tax credit of up to $7,500 for eligible vehicles—the credit (as amended in 2009) once automakers sold 200,000 EVs. ) begins to be phased out. After the manufacturer reaches the initial cap, the credit limit is reduced by 50% for half a year, then by another 75% before disappearing completely.
But automakers — or at least most of them — aren’t ready to let go of this crutch. In a letter to congressional leaders last week, the chief executives of General Motors, Toyota Motor North America, Ford Motor Co. and Stellantis called for the removal of the cap per manufacturer and a sunset date for the “electric vehicle market.” more mature.” They argue that this will “provide more consumer choice,” “will incentivize consumers to adopt future electrification options, and provide much-needed certainty for our customers and the domestic workforce.”
In fact, President Joe Biden’s original, now dormant “Rebuild-Rebuild-Better” program could have significantly boosted the line of credit — an increase of $4,500 to the maximum credit limit for cars assembled domestically by union labor, An additional $500 credit is available for batteries made in the United States. The U.S. bill also extends the credit line for ten years and makes it refundable—meaning you can get your credit line back as a check from Uncle Sam if you don’t owe income tax. (Currently, the credit can only be claimed to the extent that the income tax liability is deducted. This, along with the higher cost of electric vehicles, has resulted in the credit being used primarily for the wealthy.)
Even without the passage of the BBB, automakers who signed last week’s letter hope they can at least remove the current $7,500 credit limit on vehicles if Democrats control Congress.
Tesla CEO Elon Musk has not helped the efforts of the four automakers — at least not directly or publicly.Although Musk has previously tweeted about the tax credit, $7,500 Credit and Halving $3,750 Credit is expiring to encourage U.S. buyers to buy their vehicles quickly, and in December, an anti-union Musk slammed the Democrats’ BBB proposal. Then he went further. “I mean removing all subsidies. But also for oil and gas,” he said.
Musk last week in a interview With club Tesla owner Silicon Valley, credit now puts Tesla at a disadvantage. “Tesla is currently successful despite our competitors having a greater tax advantage than Tesla — nonetheless, not because of it,” he said. “If you remove all EV incentives tomorrow, Tesla’s competitive position will improve significantly. I repeat, if you remove all… EV tax credits, Tesla’s position will improve immediately. ”
While Musk did not sign the letter from other automakers, Tesla is a member of the Zero Emissions Transportation Association, which recently released a report calling for clean energy tax breaks and advocates in support of consumer electric vehicle tax credits, Including expanding it to include used cars and making them refundable.
Musk may be the world’s richest man and one of the most outspoken people, with 99 million followers on Twitter, but he’s not the biggest obstacle to securing honor for future EV buyers.
Arguably Manchin, the conservative Democrat who stepped on the BBB in December and is now reportedly in talks with Senate Majority Leader Chuck Schumer (D-N.Y.) over some sort of stripped-down version of the bill, which would include Also includes energy incentives such as higher taxes on the wealthy and reduced deficits. (All 50 Senate Democrats, including Manchin, are needed if Democrats want to push the package without Republican support.)
Biden’s version of greater EV credit may not happen, largely due to Manchin’s opposition to union terms. While Manchin called bonuses for union-built cars “wrong” and “not what we are as a country,” he also expressed doubts about overall credit.
“There’s a waiting list for electric cars right now, and the gas price is $4. But they still want us to put in a $5,000, $7,000 or $12,000 credit to buy an electric car,” Manchin told a Senate budget hearing in April. “It doesn’t make any sense to me anyway. When we can’t make enough for the people who need it, we’re still paying them to take it – which is absolutely ridiculous in my opinion. ”
Republicans also criticized the credit primarily for improving lives — a feature of its current non-refundable nature — and the high price of electric vehicles. Last August, Manchin, along with Sens. Krysten Sinema (D-Ariz.) and Mark Warner (D-Va.), voted with Republican lawmakers on a non-binding budget amendment that would add electric vehicle tax credits Limited to vehicles with an income of less than $100,000 and a price of less than $40,000.
Letter signed by Toyota in support of removing current credit cap may be specific to Manchin, Rep. Debbie Dingle (D-Mich.) indicated Reuters and a source familiar with the talks told Forbes. Toyota’s only combined engine and transmission plant in North America is located in Putnam County, West Virginia. The plant employs about 2,000 people and has invested more than $10 million in various local charitable and educational programs “over the past two decades,” according to the company. It has no union.
Last September, Toyota executives wrote to the Ways and Means Committee objecting to the BBB rule providing greater credit for electric vehicles produced in union factories, saying it “puts the goal of accelerating electric vehicle deployment on the back burner by discriminating against U.S. auto workers.” They chose not to join the union. They added: “It’s not fair, it’s wrong, and we ask you to reject this blatantly biased offer. ”
Manchin’s office did not say whether he would support the tax credit without union incentives, nor did he respond to Forbes’ questions about whether he favors removing the 200,000 cap.
For their part, automakers are insisting that at least current lines of credit need to be extended, although some EVs require a waiting list. A Stellantis spokesman said the EV market “needs help to reach critical mass” and that “removing the cap is the most expedient way to get there”.
Ed Lewis, Toyota’s director of public policy communications, told Forbes in an email that tax incentives for EV customers will help accelerate the transition to an electric future. “As we know from the Prius, the product is only part of the equation,” Lewis said. “We can make great, reliable electric vehicles—but we need to help customers understand, afford, and ultimately adopt the technology to have a real impact. To deliver on the long-term commitment to electric vehicles, Toyota supports a comprehensive public policy approach that includes Tax incentives to encourage drivers to choose the low-carbon powertrain that best suits their situation.”
Benjamin Zycher, a senior fellow at the American Enterprise Institute, who focuses on energy and environmental policy, noted that automakers with broad product lines (meaning, not Tesla) in particular need to keep electric vehicle sales flowing in order to “reach a federal-level fleet. Average fuel economy standards.” If the credit runs out, they will “have to raise the price of conventional cars and lower the price of electric cars” to meet those goals, he said.
“I understand why they fight [for lifting the cap]but we really shouldn’t have this EV tax credit at all,” Zycher said, adding that if automakers succeed in raising the cap, it’s “unrealistic” to think the tax credit won’t be extended there. After that again. “Under the leadership of the automakers, what you end up with is that there is no cap on the number of vehicles at all, and EV credits aren’t going to be taken away,” he said.