Making electric cars more affordable.
For the auto industry, one of the most important provisions in the climate bill would eliminate a cap on how many cars from each manufacturer are eligible for a $7,500 tax credit that taxpayers get for buying electric vehicles. Currently, the credits are phased out after a manufacturer has sold 200,000 electric or plug-in hybrid vehicles.
Understand What Happened to Biden’s Domestic Agenda
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‘Build Back Better.’ Before being elected president in 2020, Joseph R. Biden Jr. articulated his ambitious vision for his administration under the slogan “Build Back Better,” promising to invest in clean energy and to ensure that procurement spending went toward American-made products.
A two-part agenda. March and April 2021: President Biden unveiled two plans that together formed the core of his domestic agenda: the American Jobs Plan, focused on infrastructure, and the American Families Plan, which included a variety of social policy initiatives.
The Infrastructure Investment and Jobs Act. Nov. 15, 2021: President Biden signed a $1 trillion infrastructure bill into law, the result of months of negotiations. The president hailed the package, a pared-back version of what had been outlined in the American Jobs Plan, as evidence that U.S. lawmakers could still work across party lines.
A surprise deal. July 28, 2022: In a reversal, Mr. Manchin agreed to a deal to include hundreds of billions of dollars for climate and energy programs and tax increases in a package to subsidize health care and lower the cost of prescription drugs. The package’s climate proposals would be the most ambitious climate action ever taken by Congress.
Restoring the credits would be huge for Tesla and General Motors, which have used up their quotas, as well as companies like Ford Motor and Toyota that will soon lose access to the credits. The new tax credit, available through 2032, would make vehicles from those companies more affordable and address criticism that only rich people can afford electric cars.
“A big swath of middle-class Americans will be able to get this credit that otherwise would have been blocked out because of the credit limit,” said Joe Britton, executive director of the Zero Emission Transportation Association, whose members include Tesla as well as makers of charging equipment, suppliers of battery materials and other companies tied to the electric vehicle business. “That’s a big deal.”
For the first time, used cars that are battery powered would qualify for a tax break of up to $4,000. That is important because most people buy secondhand, not new, cars. The average price of a new electric car has risen above $60,000, out of reach for many buyers despite the fuel and maintenance savings that those vehicles provide.
Individuals making more than $150,000 a year or couples earning $300,000 or more would not qualify for incentives for new electric cars. The income limits for the used-car incentive are $75,000 for individuals and $150,000 for couples. The credits would not apply to sedans that sell for more than $55,000 and vans, pickups and sport utility vehicles listed at more than $80,000.
“They are trying to drive adoption among middle-class and lower-class buyers, and that’s a good thing,” said Akshay Singh, a partner at the accounting and consulting firm PwC who specializes in the auto industry. “That’s where the bulk of the market is.”
