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U.S. automakers say 70% of EV models would not qualify for tax credit under Senate bill

Stock Markets Aug 06, 2022 06:35AM ET
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© Reuters. FILE PHOTO: The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, U.S., March 16, 2021. REUTERS/Rebecca Cook

By David Shepardson

WASHINGTON (Reuters) - Most electric-vehicle models would be ineligible for a $7,500 tax credit for U.S. buyers under a Democratic proposal in the U.S. Senate, a group of major automakers said on Friday.

Automakers have been privately expressing concern about the proposal's increasing requirements for vehicles' batteries and critical-mineral contents to be sourced from the United States.

John Bozzella, heads of the Alliance for Automotive Innovation that represents General Motors (NYSE:GM), Toyota Motor (NYSE:TM), and Ford Motor (NYSE:F) among others, said a July 27 proposal by Senators Chuck Schumer and Joe Manchin would make 70% of 72 U.S. electric, plug-in hybrid and fuel-cell EVs ineligible upon passage.

"None would qualify for the full credit when additional sourcing requirements go into effect," he said.

Car makers want significant changes to the proposal, which is part of a larger drug pricing, energy and tax bill.

Without the tax credit, the vehicles become more costly for American consumers, and this could impact demand and sales. It could also slow progress toward President Joe Biden's target to have half of all new vehicles sold be electric or plug-in hybrid models in 2030.

An analysis by the Congressional Budget Office on Wednesday suggested just 11,000 new EVs would use the credit in 2023.

Manchin and Schumer's offices did not immediately comment. The Senate could vote as soon as Saturday on the bill.

"I don't believe that we should be building a transportation mode on the backs of foreign supply chains," Manchin said on Tuesday.

The bill includes rising requirements for the percentage of battery components originating from North America based on value. After 2023, it would disallow batteries with any Chinese components.

"A more gradual phase-in of the battery component, critical mineral and final assembly requirements – that better reflect current geopolitical, sourcing and mineral extraction realities – will preserve the credit for millions of Americans," Bozzella wrote.

Automakers want to expand countries from which batteries, battery components and critical minerals can be sourced to include NATO members, Japan and others.

The new EV tax credits, which would expire at the end of 2032, would be limited to trucks, vans and SUVs with suggested retail prices 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.

U.S. automakers say 70% of EV models would not qualify for tax credit under Senate bill
 

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Comments (6)
Me comment
Me comment Aug 06, 2022 8:54AM ET
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manchin is from a fossil fuel state, why would he support electric vehicle credits.
ZS Beck
ZS Beck Aug 06, 2022 8:54AM ET
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He's an undercover republican
Brad Albright
Brad Albright Aug 06, 2022 8:54AM ET
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Compromise. He got consensus on part of his agenda, including expedited natural gas pipeline.
gab nea
gab nea Aug 06, 2022 8:11AM ET
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automakers have not learned their lesson yet from supply chain disruptions from foreign countries esp. unfriendly communists. no patriotism! buy a foreign car then if you like outsourcing!
Brad Albright
Brad Albright Aug 06, 2022 8:11AM ET
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A lot of foreign cars are made in America.
gab nea
gab nea Aug 06, 2022 8:06AM ET
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great future thinking plan, thank you president of the people, not the rich!
Ernie Keebler
Ernie Keebler Aug 06, 2022 7:12AM ET
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Tired of all the trading scheme ads here.  If you don't vote with your dollars you'll be forced to vote with your guns or become subservient peasants to your own or a foreign government.  If you don't uphold human rights and moral and ethical standards you're no better than the greedy scum that want to control
Roger Miller
Roger Miller Aug 05, 2022 9:44PM ET
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Another example of the ineffectiveness of government policies to do what they intend, resulting in more harm than good do to the waste of tax dollars and other resources. The US became a superpower thanks to free markets, not communist style economic planning.
David Beckham
David Beckham Aug 05, 2022 9:44PM ET
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Eel it sounds like america become communist
Jimmy Doodoo
JimmyD Aug 05, 2022 9:44PM ET
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#senilejoe is a ***
Jimmy Doodoo
JimmyD Aug 05, 2022 9:44PM ET
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Moe - ron
Brad Albright
Brad Albright Aug 05, 2022 9:44PM ET
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What harm to you imagine would come from this bill?
Frank Taylor
Frank Taylor Aug 05, 2022 8:29PM ET
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tough sh! t, try sourcing from Australia or any other friendly democracy, we should learn by example set, re Germany and Russia fiasco.
 
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