EV Tax Credits Left Out in the Cold as Biden, Dems Ponder New Plan

As more electric vehicles reach dealer showrooms, EV tax credits are stuck in a legislative limbo, according to observers on Capitol Hill. 

2022 Ford Mustang Mach-E GT - in woods
Sales of electric vehicles, like the Ford Mustang Mach-E, have been on the rise.

The logjam on Capitol Hill also means buyers of EVs from General Motors and Tesla remain ineligible for the existing credits, according to fueleconomy.gov. 

However, battery-electric vehicles and plug-in-hybrids from a variety of manufacturers, including Ford, Stellantis, Rivian, Lucid, Audi, Porsche, Volkswagen, Hyundai, Volvo and other manufacturers are eligible for tax credits ranging from $2,500 to $7,500 because they have not yet hit the ceiling Congress put in place more than decade ago. 

Automakers are now supporting revisions, updating the EV tax credit law since several more manufacturers, such as Ford, are quickly approaching the ceiling built into the current law. 

GM Chairman and CEO Mary Barra specifically thanked Senator Debbie Stabenow during the ceremony announcing GM’s $7 billion EV production investment Michigan Tuesday morning for her efforts to move the new tax credits through Congress. 

Campaign for wider credits continues 

With electric vehicles gaining traction, the Biden administration is advocating expanding and updating the EV tax credits as part of its effort to foster the development of clean energy and fight climate change. The Biden EV credits also included an extra $4,500 credit electric vehicles built in the U.S. with union labor. 

GM Factory ZERO Grand Opening
President Joe Biden is rethinking his strategy for getting the U.S. Senate to sign off on

Biden’s climate change agenda, however, stalled in Congress before Christmas, when Senator Joe Manchin (D-West Virginia) said he could not in good conscience support the administrations omnibus Build Back Better bill because it was too expensive and could add inflationary pressure. 

Republican Senators were uniformly opposed to Build Back Better, which cleared the U.S. House of Representatives on a party line vote with Democrats favoring it and Republicans opposing it.  

One piece of Biden’s agenda to boost electric vehicles — $551 million expansion of the nation’s EV charging network — was approved by Congress as part of the infrastructure bill. 

Now Biden and his allies on Capitol Hill as well as automakers with a vested interest in electric vehicles are searching for a way forward. 

“Democrats are eyeing turning their focus toward bipartisan bills and legislative housekeeping like funding the government and confirming Biden’s nominees on the floor, while trying to figure out a path forward on a pared-down social and climate spending without boxing themselves in with a hard deadline,” reported The Hill, a news website that follows developments on Capitol Hill. 

VW EV hub 3
EV sales rose more than 80% in 2021 although buyers of GM and Tesla products didn’t enjoy the same tax credits as other EV buyers.

Biden suggests a way 

“It’s clear to me that we’re going to have to probably break it up,” Biden said during a two-hour press conference, marking the end of his first year in office.  

“The president suggested key items included in the Build Back Better such as clean energy and early childhood education could fare better if they were presented to Congress in separate bills,” said White House National Economic Council Director Brian Deese during an appearance on Bloomberg TV. 

“The clean-energy provisions in this bill will not only make it easier and cheaper to deploy clean energy and address the climate crisis. It will reduce energy costs.” 

The Hill, however, noted in its analysis Congress faces multiple tasks right now. Nonetheless, the tax credits for EV buyers are still very much. 

Rep. Dan Kildee, who helped move the tax credits through the House, noted this week, “The future of the automotive industry is electric. As a country, we either let China continue to dominate the production of electric vehicles, or we can make strategic investments like today’s announcement that will result in Michigan workers and union labor making these vehicles here in the United States. In Congress, I am working with Senator Stabenow to expand the electric vehicle tax credit, to give consumers a tax cut and incentivize more American-made electric vehicles.” 

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