According to the National Post, U.S. Democrats have recently proposed an increase in tax credits for electric vehicles (EVs) that will offer much higher incentives to union-made zero-emission vehicles (ZEVs) assembled locally.
The beefed up tax credits will serve to further President Joe Biden’s ambition of EVs making up 50% of all vehicles sold in the U.S. by 2030.
The proposed tax credit awards up to $12,500 USD per vehicle for U.S. union-made ZEVs assembled in the U.S., but only a $7,500 USD incentive for most other EVs. Notably, Tesla vehicles only qualify for the lower, $7,500 USD incentive under those conditions.
The U.S.’s Big Three automakers — General Motors Co., Fiat Chrysler, and Ford, will be eligible for the additional $5,000 USD in government subsidies, much to the dismay of foreign automakers like Honda Motor Co. and Toyota Motor Corp..
“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.
Last we checked, Tesla was an American manufacturer, and regularly claims the throne of top EV seller worldwide.
The proposed incentive program will run for 10 years, and the Democrats estimate it will cost $33-34 billion USD over its life. Before the bill becomes law and takes effect, however, it will have to gain the support of Senate Republicans in a House Ways and Means Committee vote on Tuesday.
The bill isn’t all bad for Tesla — it does remove a caveat that pulled automakers’ tax credits after they hit 200,000 electric vehicles sold, making Tesla eligible for at least the $7,500 USD baseline tax credit for EVs. Even if the proposal is accepted, we’ve seen Tesla “game the system” for tax credits in the past.
