Not all EVs would qualify for the maximum $12,500 tax credit.
While the price tag attached to a combustion-powered vehicles has largely been a case of what you see is what you get, the same isn't true for electric vehicles that currently qualify for price-easing incentives. Among these is the federal tax credit that amounts to as much as $7,500 depending on the EV in question. Until EVs attain cost parity with conventionally-powered cars, these incentives could dictate whether a certain consumer makes the move to electric power or not. However, some recently proposed changes to EV tax credits have been controversial as they benefit certain automakers more than others.
Back in May, we reported on a proposal that could increase the federal tax credit to $12,500. However, this maximum amount only applies to vehicles that are built in unionized US factories. This rules out models like the Ford Mustang Mach-E (assembled in Mexico) and all Teslas (since the EV automaker doesn't have US union workers).
"Incentives for EV sales should be broadly applicable across the marketplace in order to accelerate sales and consumer adoption," said Don Stewart, executive vice president of public affairs at the Alliance for Automotive Innovation.
Volkswagen, which plans to build ID.4 models at its Chattanooga plant, echoed this view, saying that it supports incentives that "do not favor one automaker over another."
Besides forcing consumers to choose between the car they want and the maximum incentive available, the proposed tax incentives also have a negative impact on US auto workers that aren't part of a union. Jennifer Safavian, CEO of Autos Drive America, described the proposal as "discriminatory" to these workers.
Steve Gates, the 2021 chairman of the American International Automobile Dealers Association and who owns a dealership selling Fords, Toyotas, and more, said that he doesn't "think the government should be picking winners and losers, and that's what this proposed legislation does."
The bill is known as the Clean Energy for America Act and was advanced by the Senate Finance Committee in May. With so many industry stakeholders clearly of the opinion that the bill doesn't benefit everyone equally, it remains to be seen if the proposal sees the light of day in its current form.