Making electric cars more affordable.
For the auto industry, one of the most important provisions in the climate bill would be eliminating the limit on how many cars from each manufacturer are eligible for the $7,500 tax credit that taxpayers get for buying electric vehicles. Currently, credits are phased out after a manufacturer has sold 200,000 electric or plug-in hybrid vehicles.
Understand what happened to Biden’s domestic agenda?
‘Build Back Better.’ Before being elected president in 2020, Joseph R. Biden Jr. articulated his ambitious vision for his administration, under the slogan “Build Back Better,” to invest in clean energy and ensure that purchase spending goes toward American-made products.
Restoring credit would be huge for Tesla and General Motors, which have used up their quotas, as well as companies such as Ford Motor and Toyota that will soon lose access to credit. The new tax credit, available by 2032, will make those companies’ vehicles more affordable and address criticism that only the wealthy can afford electric cars.
“A large swath of middle-class Americans would be able to obtain this credit, which otherwise would have been blocked due to credit limits,” said Joe Britton, executive director of the Zero Emissions Transportation Association, whose members include Tesla Charging Equipment. manufacturers of batteries, suppliers of battery materials and other companies involved in the electric vehicle business. “It’s a big deal.”
For the first time, used battery-powered cars will get a tax exemption of up to $4,000. This is important because most people buy a new car, not an old one. The average price of a new electric car exceeds $60,000, which is out of reach for many buyers, despite the fuel and maintenance savings those vehicles offer.
Individuals earning more than $150,000 a year or couples earning $300,000 or more will not be eligible for incentives for new electric cars. The income limit for a used car incentive is $75,000 for individuals and $150,000 for couples. Credits will not apply to sedans that sell for more than $55,000 and vans, pickups and sport utility vehicles listed for more than $80,000.
“They are trying to drive adoption among middle class and lower class buyers, and that is a good thing,” said Akshay Singh, partner at PwC, an accounting and consulting firm specializing in the auto industry. “That’s where the bulk of the market is.”