Senate deal would revive EV tax credits for GM, Tesla and Toyota

Automakers may get the electric vehicle tax credit extension they’ve been hoping for. Bloomberg and InsideEV’s claim Senators Chuck Schumer and Joe Manchin had reached agreement on the Inflation Reduction Act that would replace the 200,000-unit cap on federal electric vehicle tax credits with a system that would restore those benefits to GM, Tesla and Toyota. Corresponding Bloomberg‘s sources said the new approach is a compromise that would switch to price- and income-based caps, drop union manufacturing requirements and offer credit for used electric vehicles.

The law would provide up to $7,500 in credit for electric SUVs, trucks and vans priced up to $80,000, while cars would have to cost $55,000 or less. Individuals would not need to make more than $150,000 a year, while couples could make up to $300,000 with good credit. You can reportedly get a loan of up to $4,000 to buy a used electric vehicle, although the income cap is said to be much lower. Crucially, the credit could be offered at the point of sale (e.g. online or at a retailer) rather than as a tax refund – you would receive your savings much sooner.

Although the deal is expected to drop union manufacturing requirements, there would still be incentives for domestic manufacturing. Although the exact terms are not clear, EVs would need to be built in North America and source many materials locally. This would primarily represent a concession to Canada, which is reluctant to previous proposed legislation that would have required US-only assembly. Canadian factories produce US-bound cars for several major brands.

The Schumer-Manchin Pact is also poised to revive some of the Biden administration’s environmental strategy, including its hopes for zero-emission vehicles, which will account for half of new sales by 2030. Bloomberg said. Manchin had objected to the earlier proposal, partly because he felt the union rule would favor established American brands like Ford and GM and disadvantage competitors like Tesla.

Further details of the deal are still pending and there is a chance that terms will change. However, if the Anti-Inflation Act passes as claimed, it could significantly transform the automotive landscape. GM, Tesla, and Toyota could effectively lower the prices of their EVs, offsetting recent price increases, while Nissan and other brands wouldn’t have to worry about hitting a unit cap at all. The move could also stimulate the used electric vehicle market by offering a clearer financial incentive over buying a new vehicle. Put simply, EVs could become more accessible even without lower-cost models in the pipeline.

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