And billions will be spent to help EV manufacturers expand facilities.
A new bill drawn up by Senate Democrats proposes several new tax breaks and grants for car buyers and automotive manufacturers.
If this bill passes, the car-buying public can look forward to a $4,000 tax credit for used electric vehicles (or 30% off the cost of the vehicle) and an extension of the $7,500 rebate for new vehicles.
At present, once a manufacturer has sold 200,000 eligible vehicles, the tax credit no longer applies, but President Joe Biden proposed expanding the cap in February last year. GM, Tesla, and Toyota have all hit the sales cap and will be ecstatic about the new proposed cap.
President Biden proposed that EV tax credits be boosted to $12,500 per vehicle, but the Schumer Manchin proposal that is being put forward now has kept it at $7,500 in the spirit of compromise; Senators Chuck Schumer and Joe Manchin had "some real disagreements." It's applicable to vehicles that have a gross vehicle weight rating of under 14,000 pounds, with larger, heavier commercial vehicles potentially getting up to $40,000 back.
Fortunately, Biden has put the idea of a manufacturer cap to bed, so these credits can be passed on to customers even after they've sold 200,000 qualifying vehicles. According to Reuters, the automotive manufacturers have lobbied for an extension of this credit because they can't meet the government's emissions goals without offering their customers cars at a reasonable price.
The Biden administration has set a goal of 50% of all vehicles sold by 2030 to be EV or plug-in hybrid. There is currently no indication of what the new cap will be, but there is a new set of standards that will judge who gets a break from the taxman.
The proposed new credit will be limited to trucks, vans, and SUVs that cost no more than $80,000. For sedans, hatches, and wagons, the limit is set at $55,000. These breaks are also limited to families with a gross income of $300,000 per year.
This new set of rules eliminates several top-selling EVs like the Tesla Model 3 Long Range and Performance ($59,490 and $62,990, respectively), the Model X ($126,490 +), and the Model S, which starts at $109,490. The Bolt and upcoming Equinox EV and Blazer EV would be eligible on the GM side. Some Silverado 1500 EV models will qualify, but the Hummer EV duo can forget about it.
Toyota is the big winner, with most plug-in hybrids and upcoming EVs falling under the threshold.
The bill also mentions $2 billion in grants for retooling existing manufacturing facilities, but only for producing "clean" vehicles. New manufacturing facilities will have access to $30 billion in loans, while an additional $30 billion has been set aside in production tax credits to accelerate US-based manufacturing of solar panels, batteries, mineral processing, and wind turbines. This part of the bill will benefit manufacturers who are currently in the process of making their facilities more sustainable.
The US Postal Service will receive an additional $3 billion to buy EVs and build charging stations, and $1 billion has been allocated to buy environmentally friendly school buses and garbage trucks. The bill will also include tax credits and grants for the domestic production of biofuels and the infrastructure that will go with it, but no figures for this portion of the bill are available.
Should the bill be passed, it would expire in 2032, by which time EVs should be more affordable and accessible to the public at large.