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U.S. Congress Will Vote Federal Tax Credit Including $4,500 Union Incentive

Elon Musk accused Ford and UAW of writing the new U.S. EV tax credit proposal, even if it theoretically makes Tesla eligible again. Scott Keogh said the incentive for EVs made by unionized factories is “fundamentally wrong.” None of that demoted Biden from including that proposal in the Build Back Better Act framework.
Chevrolet Bolt EUV, One of the Only EVs Eligible to the Federal Tax Credit Proposition on the Build Back Better Act 7 photos
Photo: General Motors
Kia Niro EVMini Cooper SEChevrolet Bolt EUVHyundai Kona ElectricEVs ChargingVolkswagen ID.4
According to the White House, the POTUS is pretty confident that the framework his administration is proposing can pass both houses of Congress. However, that does not mean that all propositions made by it will be approved as they are.

The deal is that the negotiation process Biden said he had with Congressional Leadership and multiple other members of the Congress would probably have suppressed the idea if it had no chance of being approved.

We would love to hear if the federal tax credit for EVs will go for Congress voting with the $40,000 limit. If it is still included, that will explain why Musk thinks the new incentive is tailored to benefit only a few American companies such as GM and Ford.

In fact, the only cars eligible to receive the full federal tax credit nowadays would be the Chevrolet Bolt EV and Bolt EUV, as Green Car Reports mentions. Other options such as the Hyundai Kona Electric, Ioniq Electric, Mazda MX-30, Kia Nio EV, and Volkswagen ID.4 would get only the $7,500 credit some of them already enjoy nowadays. In other words, things would not change that much for them.

Perhaps that’s Biden’s goal: to bring more affordable EVs to the U.S. market, made by unions. There are only two outcomes possible: either that will put even more pressure on battery pack prices than we already have today, or carmakers will just ignore the new incentives. It may even bring about both of them.

The current chip shortage shows that automakers are focusing on vehicles with higher profit margins at the expense of sales numbers. This is what granted the Tesla Model 3 the top position in European sales charts in September. As we already wrote, batteries are also in short supply because there are not enough battery factories for all the emerging demand. Raw materials such as lithium are also experiencing massive price increases.

For automakers to sell more affordable EVs, they have to solve these supply chain issues. Biden’s plan would better address them to help his plan for electric vehicles work.
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About the author: Gustavo Henrique Ruffo
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Motoring writer since 1998, Gustavo wants to write relevant stories about cars and their shift to a sustainable future.
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