Energy

U.S. Senate Panel looks to boost EV Tax Credit to $12,500: What we know so far

The United States Senate Finance Committee is looking to boost the possible Electric Vehicle Tax Credit to $12,500 for manufacturers that have assembled union workers within the U.S. Other companies that do not have unionized workers in the U.S. will still qualify for tax credits but will not receive the full amount.

The “Clean Energy for America” Bill would limit tax credits to vehicles with a price tag of less than $80,000. Companies with unionized workers would be able to offer the full $12,500 tax credit: $7,500 for the electric vehicle, an additional $2,500 for vehicles assembled within the United States, and another potential $2,500 for cars built at production facilities whose workers are members of or are represented by a labor union. Michigan Democratic Senator Debbie Stabenow leads the proposal. The Bill advanced after a 14-14 tie vote.

Stabenow’s proposal aims to “level the playing field” for electric car makers as the gas-powered companies have ruled the automotive industry for 100 years. A century ago, there was a choice between electrification or gas-powered cars, and automakers chose to utilize fossil fuels as a power source.

“We picked a winner, and they won – 100 years ago. Now, we’re just trying to level the playing field,” Stabenow said.

Perhaps the biggest addition to the EV Tax Credit, besides the value, is that there will be no cap to how many vehicles a manufacturer can sell before they no longer qualify for the credit. The current EV tax credit only allows OEMs to sell 200,000 electric cars before they no longer qualify for the credit; Tesla and GM are the only two companies that have reached this threshold. The credit would eventually phase out after three years, once 50% of U.S. passenger vehicle sales are composed of electrified models.

The possible $5,000 on top of the $7,500 will only apply to manufacturers that can offer both unionized workers and U.S.-based production efforts. Unfortunately, this will only allow Tesla buyers to qualify for $10,000 credits, still a hefty sum that could take up to 25% off of the base price of a vehicle if the car buyer is purchasing a Standard Range+ Model 3. Volkswagen, Toyota, Nissan, and Honda would also not qualify for the full $12,500 EV credit because they do not have U.S. unionized workers.

The bill is also set to assist the manufacturers with a 30% tax credit to retool or build new EV-focused facilities. The facilities could be used to develop new EV technologies, battery production plants, or new incentives to purchase commercial electric vehicles like the Tesla Semi.

President Joe Biden’s $174 billion EV aid package has $100 billion slotted out for consumer rebates. After a speech at Ford’s Dearborn, Michigan, Plant last week, the President reiterated his support for electrification and unionized automotive workers while getting a sneak peek ride in the F-150 Lightning, Ford’s introductory electric truck. United Auto Workers President Rory Gamble shared support for the possible passing of the Clean Energy for America Bill because it would support unionized workers.

“EV production will directly create the good-paying union jobs of the future President Biden has championed,” Gamble said via Reuters.

What do you think? Let us know in the comments below, or be sure to email me at [email protected] or on Twitter @KlenderJoey.

U.S. Senate Panel looks to boost EV Tax Credit to $12,500: What we know so far
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