U.S. Senate Panel Pushes EV Tax Credit of Up to $12,500
On Wednesday, the U.S. Senate Finance Committee advanced a bill that would effectively increase electric vehicle (EV) tax incentives up to $12,500 for all EVs manufactured by U.S. union workers, according to Reuters.
The legislation would eliminate the current EV maximum credit of $7,500, and would only require a base price of under $80,000.
The legislation, entitled the “Clean Energy for America” bill, advanced on a tied vote of 14-14. If it were to pass, it would eliminate and replace current EV cap rules until half of all U.S. vehicle sales were EVs, at which point the legislation would phase out over a three-year period.
EV tax credit bill from Senate Finance Committee:
$7500 EV tax credit reinstated
+$2500 for 🇺🇸made
+$2500 for union made
REFUNDABLE credit so valuable for everyone
Limit of $80K MSRP
Begins to phase out when EVs are 50% of new cars sold in 🇺🇸https://t.co/aM6CCJcmRO pic.twitter.com/MvD7l0Lj3d
— Not_an_Analyst🇺🇦 (@facts_tesla) May 27, 2021
The bill, as proposed by Senator Debbie Stabenow, would increase the $7,500 tax credit by $2,500 for vehicles manufactured in the U.S. It would also increase by another $2,500 for facilities where employees are represented by a U.S. labor union.
Under the current system, electric automakers begin losing their eligibility upon hitting 200,000 EVs sold. Last year, Tesla sold over 500,000 cars, and the company is already out of tax credits for 2021.
General Motors, which has also run out of credits for the year, would benefit from the bill along with Ford since they employ large amounts of U.S. union workers in their assembly plants.
Companies like Tesla and Volkswagen, which do not have U.S. union workers, as well as others building EVs outside the U.S., would only be eligible for smaller tax credit amounts under the new system ($10,000 for Tesla, $7,500 for Volkswagen).