U.S. Senate Democratic deal includes new EV tax credits
2022.07.28 05:14
FILE PHOTO: Chairman U.S. Senator Joe Manchin (D-WV) speaks during a U.S. Senate Energy and Natural Resources Committee hearing on Capitol Hill in Washington, U.S., July 19, 2022. REUTERS/Elizabeth Frantz
By David Shepardson and Timothy Gardner
WASHINGTON (Reuters) -A Senate Democratic deal includes a new $4,000 tax credit for used electric vehicles and other new tax credits and grants for automakers to retool factories to build greener cars.
The deal struck between Senate Majority Leader Chuck Schumer and Democratic Senator Joe Manchin also includes an expansion of the existing $7,500 EV tax credit as well as a new $10 billion investment tax credit to build clean-technology manufacturing facilities, according to a summary from Schumer’s office.
If it becomes law, it will further provide up to $20 billion in loans to build new clean vehicle manufacturing facilities and $30 billion for additional production tax credits “to accelerate U.S. manufacturing of solar panels, wind turbines, batteries, and critical minerals processing.”
Schumer said the Senate is expected to vote on the proposed legislation next week. Then it will go to the Democrat-controlled House of Representatives.
President Joe Biden last year proposed boosting EV tax credits to up to $12,500 per vehicle — including $4,500 for union-made vehicles — and lifting a cap of 200,000 vehicles per manufacturer on the $7,500 credit. Automakers including General Motors (NYSE:GM) and Tesla (NASDAQ:TSLA) have hit the cap and are no longer eligible for the existing EV tax credit.
Automakers have heavily lobbied for an extension of the EV tax credit, warning they cannot meet aggressive goals to cut emissions without tax incentives that make electric vehicles more cost competitive.
The new EV tax credits would be limited to trucks, vans and SUVs with a suggested retail price of no more than $80,000 and to cars priced at no more than $55,000. They would be limited to families with adjusted gross incomes of up to $300,000 annually.
The deal would further provide $3 billion for the U.S.
Postal Service to buy zero-emission vehicles.
A further $1 billion in tax credits is provided for purchasing heavy-duty vehicles, such as school and transit buses and garbage trucks.
The bill will also include new tax credits and grants “to support the domestic production of biofuels, and to build the infrastructure needed for sustainable aviation fuel and other biofuels.”
