DETROIT (AP) — Senate Democrats’ surprise agreement on a slimmed-down bill to support families, strengthen infrastructure and fight climate change is also likely to boost electric vehicle sales.
The measure agreed to by Senate Majority Leader Chuck Schumer and Sen. Joe Manchin of West Virginia would give electric vehicle buyers a $7,500 tax credit starting next year until the end of of 2032. There is also a new $4,000 credit for those who buy used electric vehicles, a move to help the middle class go electric.
But as things often happen in Washington, there are a lot of strings and asterisks.
To qualify, the electric vehicle must be assembled in North America, and there are limits on buyers’ annual income. There are also caps on sticker prices for new electric vehicles — $80,000 for pickups, SUVs and vans, and $55,000 for other vehicles — and a $25,000 limit on the price of electric vehicles. second hand.
Still, even with the restrictions, the credits should help boost electric vehicle sales, which are already growing as automakers introduce more models in different sizes and price ranges, said Edmunds.com analyst Jessica Caldwell. .
“The electric vehicle tax credits in the bill will benefit consumers and reduce costs for low- and middle-income families,” the Sierra Club said of the measure, which has yet to be approved by the authorities. two rooms. “We hope for quick adoption.”
For the first half of this year, electric vehicles accounted for about 5% of new vehicle sales in the United States, with 46 models on sale. S&P Global Mobility expects this to reach 8% next year, 15% by 2025 and 37% by 2030.
Currently, many new electric vehicles, including two of four models from sales leader Tesla, would not qualify for credits because they are priced above bill limits, Caldwell said. But the number of eligible vehicles will grow as automakers roll out more consumer electric vehicles over the next few years, she said.
“I imagine those price ranges will become much more realistic in the years to come when you’ll likely have more vehicles that fall within those parameters,” Caldwell said.
Several automakers, including Ford and Hyundai, already have them in the $40,000 range, and General Motors plans next year to start selling a Chevrolet small SUV for around $30,000 with around 300 miles of range per charge.
Additionally, there aren’t many used electric vehicles under $25,000 yet, and mostly older ones, with lower ranges per charge, Caldwell said, noting that a small electric car 5-year-old Chevrolet Bolt – one of the lowest-priced EVs on the road – will likely cost upwards of $25,000.
“It seems like something that potentially needs to be revisited to make more sense given the current market,” she said.
To get the credit, buyers of new electric vehicles cannot have modified adjusted gross incomes of more than $300,000 per year if they file joint tax returns, $225,000 for a householder and $150,000 for all taxpayers not belonging to the first two categories.
For used electric vehicles, the income limits are $150,000 in the event of a joint declaration, $112,500 for a head of household and $75,000 for other persons not included in the first two categories.
The bill also removes caps on the number of tax credits each manufacturer can offer. General Motors, Tesla and Toyota have all exceeded the cap and can no longer offer credits under a previous measure. But other manufacturers still offer them.
Additionally, more than half the value of battery components must be manufactured or assembled in North America to earn full credit. And at least 40% of the minerals used in batteries must come either from the United States or from a country with which it has a free trade agreement. These percentages increase gradually over the years, and minerals recycled from used batteries in North America also qualify.
Credits would also go to buyers of hydrogen fuel cell vehicles and plug-in hybrid vehicles. Plug-ins can travel several miles on electricity alone before the gasoline-electric hybrid powertrain kicks in.
The tax credits for electric vehicles are much lower than what several Democratic automaker state lawmakers had proposed earlier. No more extra credits for electric vehicles made in the United States by unionized workers.
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