Stock prices of electric vehicle (EV) companies fell as much as 9% in Monday trading after the Senate all but killed U.S. President Joe Biden’s ‘Build Back Better’ bill, which included tax credits of up to $12,500 USD on the purchase of plug-in vehicles — reports CNBC.
Startups were hit the hardest, with Lordstown Motors, Faraday Future, and Nikola all dropping by more than 7%, and China’s NIO down 6%.
Not to imply that the more experienced EV makers remained unscathed, though — Tesla and General Motors, both of which have exceeded the maximum yearly sales quota for federal EV tax credits in the U.S. but would begin anew under the Build Back Better plan, lost 3.5% and 2.03% respectively, while Ford Motor Co. was struck down by 1.77%.
Rivian Automotive, which went public last month at a share price higher than both GM and Ford, was down by 7.9% to a new low of $88.40 per share.
Biden’s Build Back Better plan was expected to accelerate EV adoption, and many Americans were actually holding out on making the switch to all-electric until the new year for those sweet, sweet tax credits.
In August, Biden signed an executive order to electrify 50% of all new cars sold in the U.S. by 2030, and the Build Back Better initiative, along with his bipartisan infrastructure package for a $7.5 billion investment in EV chargers, were integral to that goal.
The Build Back Better bill was passed by the House of Representatives last month, making its way to the U.S. Senate for approval.
The Senate is undecided on the bill, but it was all but sunk when Democratic West Virginia Senator Joe Manchin censured the bill on Sunday, saying he wouldn’t vote in favor of it in the 50-50 Senate.
The EV incentives proposed under Build Back Better included the current $7,500 tax credit on the purchase of a plug-in vehicle, along with an additional $500 for vehicles powered by batteries made in the U.S and a controversial $4,500 for vehicles assembled locally by union labor.
That last bit has invited heavy criticism from automakers like Tesla with non-unionized workforces, with CEO Elon Musk publicly bashing the proposal on several occasions. Even Canada said it was “concerned” about the bill and its possible repercussions last month.
What happens now? The White House said they will try to pass the Build Back Better plan, despite Manchin’s opposition.
