DETROIT (AP) – Senate Democrats’ surprise deal on a streamlined bill to support families, upgrade infrastructure and fight climate change is also likely to boost sales of electric vehicles.
The measure agreed by Senate Majority Leader Chuck Schumer and Senator Joe Manchin of West Virginia would give electric vehicle buyers a $ 7,500 tax credit starting next year, through the end 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 go in Washington, there are a lot of strings and asterisks.
To be eligible, the electric vehicle must be assembled in North America and there are annual income limits for buyers. There are also sticker price limits 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 used electric vehicles.
However, even with the restrictions, the credits should help spur electric vehicle sales, which are already increasing as automakers introduce more models in different sizes and price ranges, said Jessica Caldwell, an analyst at Edmunds.com.
“Electric vehicle tax credits on bills 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 both chambers. . “We hope for a 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 it to reach 8% next year, 15% by 2025 and 37% by 2030.
At the moment, many new electric vehicles, including two of the four models from sales leader Tesla, would not be eligible for credits because they are priced above the account limits, Caldwell said. But the number of eligible vehicles will increase as automakers roll out more traditional electric vehicles over the next few years, she said.
“I imagine these price ranges will become much more realistic in the next few years when you are likely to have more vehicles that fit these parameters,” Caldwell said.
Several automakers, including Ford and Hyundai, already have them for $ 40,000, and General Motors plans to start selling a small Chevrolet SUV next year for around $ 30,000 with around 300 miles of range per charge.
Also, there aren’t too many used electric vehicles priced under $ 25,000 yet, and those that are mostly older, with less range per charge, Caldwell said, noting that a small 5-year-old Chevrolet Bolt electric car – one of the lowest – cheap electric vehicles on the road – are likely to cost more than $ 25,000.
“It looks like it’s something that should potentially be revisited to make more sense given today’s market,” he said.
To obtain the credit, buyers of new EVs cannot have adjusted gross income greater than $ 300,000 annually if filing joint tax returns, $ 225,000 for a householder and $ 150,000 for all taxpayers not in the first two categories .
For used electric vehicles, the income limits are $ 150,000 if filing a joint declaration, $ 112,500 for a householder, and $ 75,000 for others not in the first two categories.
The bill also removes limits on the number of tax credits that each manufacturer can offer. General Motors, Tesla and Toyota have all crossed the line and cannot offer credits now under a previous measure. But other manufacturers still offer them.
In addition, more than half the value of the battery components must be manufactured or assembled in North America to obtain the full credit. And at least 40% of the minerals used in batteries must come from the United States or a country with which it has a free trade agreement. These percentages gradually increase over the years and minerals recycled from batteries used in North America also qualify.
The credits would also go to buyers of hydrogen fuel cells and plug-in hybrid vehicles. Plug-ins can travel on electric power alone for several miles before the gas-electric hybrid powertrain kicks in.
Tax credits on electric vehicles are much smaller than several democratic lawmakers in the auto states had previously proposed. Gone are the extra credits for electric vehicles made in the United States by union workers.