Tesla, GM, other EV makers get potential win in Senate deal

The surprise agreement struck late Wednesday between Sen. Joe Manchin (D., W.Va.) and Senate Majority Leader Chuck Schumer (D., N.Y.) on a legislative proposal aimed at lowering carbon emissions and healthcare costs includes several provisions to spur adoption of electric and plug-in hybrid vehicles.

Auto makers and industry lobbying groups on Thursday said they still were reviewing the measures included in the bill.

The proposed bill includes a $7,500 federal tax credit for some buyers of electric vehicles, extending an incentive that has been in place for more than a decade for plug-in models. It also includes a new $4,000 tax credit for the purchase of used electric vehicles. Both new and used cars must be sold at registered dealerships to qualify.

Absent from the proposed bill is any additional incentive for EVs built by unionized labor, a provision included last year in President Biden’s broad economic policy package that drew criticism from Tesla and other car companies with nonunion factories.

The package also would lift a cap on the number of EVs a manufacturer can sell before its models no longer qualify for the tax credit. Buyers of EVs from Tesla and GM today aren’t eligible to receive the federal credit because those companies hit the 200,000-vehicle threshold years ago.

GM has made the elimination of the cap one of its top lobbying aims. Company executives have argued that it penalizes auto makers that were earliest to develop electric cars and sell them in significant numbers.

Toyota Motor Corp. recently sold its 200,000th electric vehicle, which triggers a gradual phaseout of the tax credit for buyers of its EVs, the company said. Other manufacturers are nearing the cap, including Ford Motor Co. and Nissan Motor Co.

Last month, the chief executives of GM, Ford, Toyota and Jeep-maker Stellantis NV sent a joint letter to House and Senate leaders urging removal of the cap. The executives said the sales limit would curb EV adoption and is needed especially amid inflationary pressures that have raised the cost of production for battery-powered vehicles.

The proposed bill would exclude buyers of electric cars priced higher than $55,000 and electric trucks, vans and SUVs above $80,000. It also would include income restrictions: Buyers with household incomes of $150,000 or higher—$300,000 for married couples—wouldn’t qualify for the credit on new EV purchases. The limits on used purchases are $75,000 for individuals and $150,000 for married couples on qualifying used vehicles.

The bill also requires that at least half of the battery components used in a qualifying vehicle be manufactured or assembled in the U.S., rising gradually to 100% by the end of 2028.

The legislation also mandates similar thresholds for batteries’ raw materials, such as cobalt, lithium and other materials. A gradually increasing percentage must be sourced domestically or come from a country with which the U.S. has a free-trade agreement.

Some car makers and industry lobbyists are concerned that those requirements could disqualify many or most of the electric vehicles sold in the U.S. today. A spokesman for the Alliance for Automotive Innovation, which represents major car companies, said the group still is reviewing the bill.

A measure included last year in President Biden’s broad economic policy package included an additional $4,500 tax credit to purchasers of union-built electric cars, atop of the $7,500 standard tax credit.

 

This story has been published from a wire agency feed without modifications to the text.