U.S. Democrats Propose Spectacular Expansion of Electric Vehicle Tax Credits in Favor of Big Three

WASHINGTON, Sept. 10 (Reuters) – U.S. lawmakers on Friday proposed an extension of tax credits for electric vehicles to include significantly higher subsidies for Union-made zero-emission models assembled in the United States.

The proposal, a key part of President Joe Biden’s goal, is to ensure that electric vehicles include at least 50 percent of U.S. vehicle sales by 2030 and boost U.S. union jobs. , will give car manufacturers in the big three Detroit a big competitive edge and has garnered criticism from foreign car manufacturers like Honda Motor Co. (7267.T) and Toyota Motor Corp (7203.T).

The tax credit of up to $ 12,500 per vehicle for U.S.-made zero-emission models is compared to a $ 7,500 incentive for most other electric cars, an amount that has not changed.

The bill, however, eliminates the phasing out of car manufacturers’ tax credits after they reach 200,000 electric vehicles sold, which would make General Motors Co. (GM.N) and Tesla Inc. (TSLA.O) they would be eligible again. It would also create a new smaller credit for used electric vehicles of up to $ 2,500.

House Democrats had not previously revealed how much EV credits could be increased. The drastic rise and other revisions could reduce the price of some electric vehicles like GM’s Chevrolet Bolt by up to a third and make battery-powered vehicles more competitive or, in some cases, cheaper than similar petrol models.

“We want to encourage that. It puts American manufacturers at the forefront, which is where we want it, and reduces emissions faster than any other policy we could implement,” Michigan Democrat Rep. Dan Kildee told Reuters.

He said the new EV tax credit would cost between $ 33 billion and $ 34 billion in a decade.

“In a decade, we want to see American workers earning good wages by building American electric vehicles,” he added.

Kildee said Biden, who has turned the proposal into a cornerstone of his climate policy, “was very insistent” that he wanted a strong tax credit. “He wants us to bow. We go big and we do that,” said Kildee, who recounted a recent conversation with Biden.

INVOICE FOR OPPOSITION

GM, Ford Motor Co. (FN) and Stellantis NV (STLA.MI), the parent company of Chrysler, assemble the vehicles manufactured in the United States in plants represented by the United Auto Workers union.

In contrast, foreign carmakers operating in the United States, as well as Tesla, have no unions representing assembly workers, and many of them have fought against the UAW’s efforts to organize American plants.

Speaking of the electric vehicle tax proposal, Honda said in a statement last month that its workers “deserve fair treatment from Congress and should not be penalized for choosing a job.” .

The House Ways and Means Committee will vote on Tuesday on the proposal, which is part of a broad fiscal measure in a $ 3.5 trillion planned spending bill.

The bill will face opposition in the Senate, which is evenly distributed among Republicans and Democrats between the 50s and 50s. Republicans have harshly criticized much of the spending bill and Democrats must maintain the 50 votes in the Democratic Senate to get approval.

But a Senate panel in May also passed legislation to increase electric vehicle credits to $ 12,500 for U.S. vehicles manufactured by union workers, despite all Republicans in opposition.

The proposed EV credits would last for ten years and consumers will be allowed to deduct the value of the credit from the sale price at the time of purchase.

By 2027, the $ 7,500 credit would only apply to U.S.-made vehicles. There are also lower credits for electric vehicles with smaller batteries.

The bill says individual taxpayers must have an adjusted gross income of no more than $ 400,000 to get the new tax credit. It would limit electric vehicle credit to cars priced at no more than $ 55,000, while trucks could reach a price of up to $ 74,000.

But it is possible that these limits will be seen in the background.

Last month, the Senate, in a non-binding amendment, voted closely in favor of banning taxpayers from claiming EV tax credits if they earn more than $ 100,000 a year or if vehicles cost more than $ 40,000.

Report by David Shepardson; Edited by Edwina Gibbs

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