Automakers Are Not Happy With America's Latest EV Proposal

Government / Comments

Only some automakers are getting the upper hand.

There are many EV incentives encouraging buyers to take the plunge into the world of EVs. In the US, buyers of new electric cars are eligible for a federal tax credit of up to $7,500, making EVs more enticing and affordable. As reported by Reuters, US Democratic lawmakers have submitted an official proposal to increase EV federal tax credits by up to $12,500.

Cheaper electric cars are obviously great for consumers, but some carmakers are protesting the proposal because it gives Detroit's Big Three automakers a major competitive advantage. The current $7,500 incentive for most other electric cars will not change as part of the proposal, however. Previously, tax credits were removed after an automaker sells 200,000 electric vehicles. This put Tesla and General Motors at a disadvantage but the proposal removes this rule.

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If approved, General Motors and Tesla cars will be eligible for federal tax credits again. Under the bill, Tesla will be eligible for up to $8,000 credits. The credit applies to electric cars priced up to $55,000 and electric trucks priced up to $74,000.

With a $12,500 tax credit incentive, the price of the Chevrolet Bolt will fall by a third, making it cheaper than some combustion-powered cars. "We want to incentivize this. It puts American manufacturers in the lead, which is where we want them, and it reduces emissions faster than any other policy that we could put in place," said Representative Dan Kildee, a Michigan Democrat.

The proposal also includes a smaller credit of up to $2,500 for used EVs eligible for vehicles more than two years old and under $25,000. Taxpayers also must have an adjusted gross income of no more than $400,000 to be eligible for the new EV tax credit.

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EVs produced by General Motors, Ford, and Stellantis will be eligible for the new federal tax credit as all three companies manufacture vehicles in US plants represented by the United Auto Workers union. The problem is that this puts foreign automakers like Honda and Toyota that manufacture cars in the US at a disadvantage because they don't have unions.

In response to the proposal, Honda called the bill "unfair," arguing that it "discriminates among EVs made by hard-working American auto workers based simply on whether they belong to a union. The Honda production associates in Alabama, Indiana, and Ohio who will build our EVs deserve fair and equal treatment by Congress."

The proposal is expected to cost up to $34 billion over 10 years and will help President Biden achieve his goal of having EVs make up at least 50 percent of US car sales by 2030. Toyota says it will "fight to focus taxpayer dollars on making all electrified vehicles accessible for American consumers who can't afford high-priced cars and trucks."

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Source Credits: Reuters

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