When we reported on President Biden’s March 31 American Jobs Plan, we said that the proposed $174 billion “to win the EV market,” including point-of-sale rebates and tax incentives, and a national network of half a million EV chargers by 2030.
“The fine print on those rebates and tax credits are forthcoming,” we wrote. Now we’re starting to see some of the “fine print.”
According to a U.S. Transportation Department email sent to congressional staff and seen by Reuters, the $174 billion proposal calls for $100 billion in new consumer rebates and $15 billion to build 500,000 new charging stations. On the surface the new EV rebates could be a big boost to, say, Tesla and General Motors, but because the two automakers have sold more than 200,000 zero-emission models, they no longer qualify for $7,500 tax credits.
The White House declined to say how the $100 billion would be distributed or how much the grants will be, but Michigan Senator Debbie Stabenow and Representative Dan Kildee told Reuters they have been working on a bill to expand the EV tax credit.
The problem for GM and Tesla is, Kildee said he wants to skew the credit in favor of more-affordable vehicles with longer range, to “democratize the electric vehicle market.” He said they are “looking at ways to make the credit more accessible to middle- and lower-income families, potentially even making the credit refundable.”
That helps the Bolt EV and Bolt EUV and Tesla Model 3, but not the Hummer EVs, Cadillac Lyriq, Tesla Model S, Model Y… You get the idea.
Kildee told Reuters that EVs are “where the market is going—full stop. The only question that we have to answer is are these going to be vehicles made by American workers.” Kildee said they could also introduce a credit for used EV purchases.
Stabenow said it was important to give automakers incentives to produce electric vehicles in the United States.
“China has committed $100 billion to grab this market—both battery cell production but also in other component parts of electric vehicles,” Stabenow said. “We better take it seriously.”
Reuters points out that in 2019 Senate Democratic Leader Chuck Schumer proposed $392 billion in subsidies for consumers to trade in gasoline-powered vehicles at least eight years old for an EV, plug-in hybrid, or fuel-cell car.
We’re sure many details have yet to be worked out.
“As the mechanics of what new EV incentives and credits will be is still very much in development phase, it is difficult at this point to suggest which automakers are likely to see most benefit,” Stephanie Brinley, IHS Markit’s principal automotive analyst, told Autoweek. “The target for the incentives is to increase overall adoption of electric vehicles, and is not aimed to support one automaker over another. As with all such programs, there will still be some that inadvertently appear to benefit more than others.”
Brinley points out that automakers all in on EVs aren’t necessarily worried about incentives. Rather, they’re in it for the long haul. “Their core forward product decisions are being made independently of the potential for US tax credit,” she told us. “Government incentives will be appreciated for the potential for speeding adoption, but the incentive program is unlikely to have impact on the overall trajectory of an automaker’s EV plans.”
In fact, Brinley told us the investment in infrastructure could ultimately prove more important to increasing EV adoption than potential consumer incentives. “The incentives may have the potential to speed up the process—though it could be argued that the existing tax credit hasn’t provided that much of a spark,” she said. “The current credit program was written such that once an automaker sold 200,000 qualifying vehicles, the tax credit would be phased out. In 2008 when the rule was written, and then in 2013 when extended because no one had come close to reaching qualified sales, it wasn’t expect that it would take until 2019 for any automaker to reach that credit, let alone that only two have reached the phase out period so far [GM and Tesla].”
She told us that if you consider sales in 2020 and 2021 there are examples of EVs not eligible for the credit outselling those that are. “It is not clear that the existing credit has done much one way or another to encourage adoption over time. We have seen the combination of state and federal incentives create increases in EV sales in certain areas that fall back once they are ended, but it’s not really clear that the federal credit has moved the needle over the past decade.”
Meanwhile, as we reported several days ago a group of 10 U.S. senators called on Biden “to set a date by which new sales of fossil-fuel vehicles will end entirely.” Another group, with 70 House Democrats aboard, wants 60 percent of new passenger car and truck sales to be zero emission by 2030. California Gov. Gavin Newsom pledged to end fossil-fuel sales by 2035, and the state’s two U.S. senators, Alex Padilla and Dianne Feinstein, recently urged Biden to set his own date.
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