Up to $ 12,500, here’s how the two versions compare

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An extension of the electric vehicle tax credit, which has already enjoyed bipartisan support, has been on President Biden’s list of CO2 reduction tasks since before his election. Now, on a massive $ 3.5 trillion reconciliation spending bill, the credit faces an uncertain future.

The credit increase, seen earlier in the year as a blow to one of those big bills, has come under heavy criticism in recent days. Existing automakers are sharply divided over messages, primarily over including measures that align with a Biden priority that electric vehicles be made by unions and built in the United States.

Sticker made by UAW on Chevy Bolt EV 2022

The union qualifier has been the subject of much criticism, but the companies also appear to be alleging a higher sticker price for electric vehicles. Toyota, in a letter to Congress that clearly sets itself apart from the positions of other historic automakers, decided to object to the additional $ 4,500 for union-made models included in the House version – or the additional $ 2,500 in the Senate version – as a gift to the rich. The statement largely aligns with a the Wall Street newspaper editorial calling it “green welfare for the rich”.

To clarify, buyers of non-union or imported electric vehicles would still receive the $ 7,500 tax credit, with new constraints. But they would not be eligible for the bonus. The way the Senate version is written, buyers of the Chevy Bolt EV would be eligible to receive a credit of $ 12,500.

This has a bunch of auto makers crying out scandal. Autos Drive America, an advocacy organization representing 12 foreign automakers including Toyota, Honda, Volkswagen and others, called the union push unfair and “an insult to American auto workers.” . This group points out that 90% of today’s electric vehicles would be disadvantaged by the advantage.

Tax Credit – Climate Nexus, May 2019″ alt=”Support for the VE Tax Credit – Climate Nexus, May 2019″ width=”640″ height=”320″ data-width=”1024″ data-height=”512″ data-url=”https://images.hgmsites.net/lrg/ev-tax-credit-support–climate-nexus-may-2019_100702679_l.jpg” src-h=”https://images.hgmsites.net/hug/ev-tax-credit-support–climate-nexus-may-2019_100702679_h.jpg” src=”https://images.hgmsites.net/lrg/ev-tax-credit-support–climate-nexus-may-2019_100702679_l.jpg” src-l=”https://images.hgmsites.net/lrg/ev-tax-credit-support–climate-nexus-may-2019_100702679_l.jpg” src-m=”https://images.hgmsites.net/med/ev-tax-credit-support–climate-nexus-may-2019_100702679_m.jpg” src-s=”https://images.hgmsites.net/sml/ev-tax-credit-support–climate-nexus-may-2019_100702679_s.jpg” class=”lazy”/>

Support for the VE Tax Credit – Climate Nexus, May 2019

The $ 7,500 electric vehicle tax credit, called 30D by the IRS, is currently the largest consumer incentive proposed by the federal government to promote acceptance of electric vehicles, and several polls have found a broad support across political affiliations.

But a measure of fairness is also missing in the current version, because not everyone is eligible for it. To claim the full amount, you will need at least that much tax payable for the year. And buyers of electric vehicles from Tesla and GM cannot claim the credit because those companies have already reached a cap of 200,000 eligible vehicles.

Between the House and Senate versions of the revamped electric vehicle tax credit, several factors could potentially be included in a final and reconciled version. The House version, for example, includes a $ 500 bonus for electric vehicles with a domestically made battery, while the Senate version does not.

Tesla Factory, Fremont, California

Tesla Factory, Fremont, California

The House version also features a number of details that determine the amount, including a cap of $ 400,000 on adjusted gross income for those who can apply for the credit and lower MSRP caps for qualifying electric vehicles. As such, it would cost considerably less to implement, as it reduces the incentive with various limitations, while the Senate version would funnel twice as much money to EV incentives over the next decade.

This would result in “a deployment of electric vehicles and a reduction in emissions significantly greater” for the version of the Senate, according to the Zero Emission Transport Association (ZETA), a political group that represents manufacturers of electric vehicles, including Tesla, Lucid and Rivian, as well as a wide range of interests related to utilities, batteries and charging.

First Rivian R1T customer (from Rivian CEO RJ Scaringe via Twitter)

First Rivian R1T customer (from Rivian CEO RJ Scaringe via Twitter)

ZETA, which advocates Senate terms more broadly – including credit that does not expire or reach a cap until EVs account for 50% of all annual passenger vehicle sales in the States – United – argues that income caps hurt low-income buyers. because they make it difficult to simply apply for credit at the point of sale.

In addition, according to ZETA, MSRP caps could force automakers to make models that have lower driving range and are ultimately less desirable, which it says “diminishes the consumer experience and will slow down the economy. ‘adoption of electric vehicles’.

ZETA recently helped bring all of these details together in one place, and we present it to you in a table here:

Senate Versions vs.  EV Tax Credit Reform Chamber - ZETA data, compiled by GCR

Senate Versions vs. EV Tax Credit Reform Chamber – ZETA data, compiled by GCR

Another key difference: The House bill currently creates a used EV credit, unlike the Senate version. This provision could help allay opposition from the oil industry, which has argued that credit only benefits those who can afford new and generally more expensive vehicles.

“It is a mistake to think of incentives for the consumption of electric vehicles as ‘goodies’ for the first driver,” said Daniel Zotos, director of communications for ZETA. . “

Zotos added, “We should not unnecessarily reduce these EV consumer credits to block certain consumers or manufacturers at the cost of climate limitation, public health and economic benefits. “

The White House

The White House

This is not the first time that an extension of the EV tax credit has almost reached the finish line. A two-party approved version of the proposal – with different numbers – was dropped from a massive $ 1.4 trillion spending bill in December 2019, due to “extreme resistance” from President Trump of the time.

Will unionized automakers, non-unionized automakers, traditional full-line companies, and electric vehicle manufacturers all be able to strike a deal with lawmakers? It’s left to the machinations of Capitol Hill, and it’s bound to happen soon. Compromise may not be easy, but it could be the key to greater adoption of electric vehicles.

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