US President Joe Biden’s government is thinking about passing a bill that will seek around $174 billion for increasing electric vehicle adoption in the country. This will include a tax credit, amounting to $7,500 most probably for buyers who opt for electric cars. This will be part of the total infrastructure bill, which calls for roughly $2.3 trillion.
The $174 billion for promoting electric vehicles includes $100 billion as a rebate for electric vehicle buyers. Another $15 billion will go into EV charging infrastructure. More specifically, it’ll target the construction of 500,000 domestic charging stations. The plan also includes $20 billion for electric school buses, $25 billion for zero-emission transit vehicles and $14 billion for other tax incentives.
How it will affect Tesla and GM
The $100 billion in rebates will provide a major boost to US automakers in the electric vehicle industry. It will, however, have a special impact on both Tesla and GM. This is because neither is eligible for the current $7,500 federal tax credit. This tax credit was valid for the first 200,000 vehicles every company sells. Since Tesla and GM have both pushed for electric vehicle manufacturing, they have crossed this 200,000-vehicle mark.
Interestingly enough, other automakers, who have been slow to get off the blocks when it comes to electric vehicle sales, are still reaping the benefits of this tax credit. Currently, this credit helps foreign automakers as much as it helps domestic carmakers. And with two of the biggest domestic companies no longer valid, foreign automakers are benefitting more.
It was expected that the proposed bill will give an additional tax credit to companies that have exceeded the 200,000-sale mark. This would bring Tesla and GM back into the mix. But there could be some changes to the proposed bill, that may hamper both Tesla and GM.
US Senator Debbie Stabenow and Representative Dan Kildee are working on a bill to update the tax credit. Kildee hopes to set up a credit that favours affordable vehicles with a longer range. This will benefit Tesla’s Model 3 and Chevrolet’s Bolt EV and Bolt EUV, which comes under GM. But Tesla also has Model Y, Model S and Model X, which tend to be on the higher end of the price spectrum. GM’s upcoming Hummer EV, as well as Cadillac models, are outside the “affordable vehicle” segment.
Kildee has said that the plan is to look at ways to make the credit more accessible to middle- and lower-income families, potentially even making the credit refundable. Of course, these are just proposals. It all depends on the details, more specifically if there is some sort of price cap for the tax credit to be valid.
As of now, however, Tesla and GM stand to lose more than they gain if this proposal goes through.