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U.S. EV Tax Credits May Go to $40,000 EVs for Those Making Less Than $100,000

With the debates around the H.R. 3684 - Invest in America Act, automakers may have thought money would flow without limits for their EV enterprises. Well, the U.S. Senate showed it would not be that easy after approving a non-binding amendment to the bill. According to it, EV tax credits should be limited to electric cars below $40,000 and only to people that make less than $100,000 per year.
EVs Charging 7 photos
Photo: EV Go
Kia Niro EVMini Cooper SEChevrolet Bolt EUVHyundai Kona ElectricEVs ChargingVolkswagen ID.4
The message is pretty straightforward: if you can afford a car that costs more than $40,000, you do not need help paying for it. That also applies to those that make more than $100,000 annually. The issue is that the vast majority of electric cars currently available in the US are above those price limits.

If the amendment passes, Tesla would be entirely out of the benefit. Its cheapest car today is the Tesla Model 3 SR+ (Standard Range Plus), and it costs $39,990. With the recurring price increases the company is doing lately, the Model 3 will probably pass that limit before the bill becomes a law.

Apart from the Model 3 SR, the only EVs below the $40,000 limit in the American market are the VW ID.4 Pro, Kia Niro EV, Nissan Leaf, Hyundai Kona Electric, Hyundai Ioniq EV, Chevrolet Bolt EV, Chevrolet Bolt EUV, and Mini Cooper SE. Most automakers are betting on more expensive vehicles – with higher profit margins.

If the limit makes sense from a perspective of making EVs more affordable, it may also backfire by making people who could shift to an EV prefer to wait for more attractive options. If the tax credit was maintained at $7,500, it could make a $50,000 car end up costing $42,500. People that can afford a $40,000 car would probably like to have more choices.

At least one of the U.S. senators was pretty upset with the idea. Debbie Stabenow represents Michigan, and she said that the amendment is “anti-pickup truck.” The 2022 Ford F-150 Lightning SR has a promised price of $39,974, but all other derivatives are way more expensive than that. It is improbable that the limits will remain like the U.S. Senate just approved if Joe Biden really wants EVs to be more popular in the country.

Source: Bloomberg via Automotive News 
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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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