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Dems propose new $12,500 electric car rebate, Tesla left with $4,500 disadvantage

Originally posted by Fred Lambert | Sep. 11th 2021 | Electrek | Original Article

Democrats have proposed an updated electric car incentive program at the federal level, which would go through their $3.5 trillion social spending bill.

It would remove the limit on the number of vehicles and replace it with a timeline, introduce a higher payout up to $12,500 and make it point-of-sale, but there are also new restrictions that would put Tesla at a $4,500 disadvantage.

Ever since President Biden took over the White House and the Democrats achieved a majority in both the House and the Senate, they have made it clear that they plan to reform the federal EV incentive program.

The current program has some important flaws. The main one is that it caps the $7,500 tax credit to 200,000 electric vehicles per manufacturer.

It puts automakers who were early proponents of electric vehicles, like Tesla and GM, at a disadvantage.

The second biggest problem is that the incentive takes the form of a $7,500 tax credit, which requires you to have the equivalent federal tax burden, and it is only applied on your next taxes.

Over the last year, there have been several proposals to reform the EV incentive.

The latest one is the Clean Energy for America Act, which would increase the incentive to up to $12,500 and remove the threshold of 200,000 EVs delivered by manufacturers.

Now the House Ways and Means Committee has approved a new version of the EV incentive program as part of their $3.5 trillion social spending bill.

Here are the main changes:

• Remove the 200,000 vehicles per manufacturer cap
• Keep the $7,500 incentive for new electric cars for 5 years
• Make the $7,500 incentive a point-of-sale discount instead of tax credit
  • EVs with battery pack smaller than 40 kWh are limited to a $4,000 incentive
• Add an additional $4,500 for EV assembled at union factories
• Add another $500 for EVs using battery packs with 50% of components (including cells) are made in the US
• After the first 5 years, the $7,500 becomes only for US-made electric vehicles and it applies for another 5 years.
• They are introduce price limits on the EVs eligible for the incentives:
  • Sedans under $55,000
  • SUVs under $69,000
  • Pickup trucks under $74,000
  • Vans under $54,000
• They are also introducing caps on income to get access to the incentives, but they are fairly high at an adjusted gross income of up to $400,000 for individuals and up to $800,000 for joint filers.
  
  

As usual, these terms could change as the bill goes through the legislative process.

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