US car makers say 70% of EV models do not qualify for the tax credit under the Senate bill

The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, USA, March 16, 2021. REUTERS / Rebecca Cook

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WASHINGTON, Aug 5 (Reuters) – Most electric vehicle models do not qualify for the $ 7,500 tax credit for US buyers under a US Senate Democrat proposal, a group of major auto makers said Friday.

Car makers privately express concern about the proposal’s increasing demands on vehicle batteries and the content of critical minerals to be sourced from the United States.

John Bozzella, heads of Alliance for Automotive Innovation, which represents among others General Motors (GM.N), Toyota Motor (7203.T) and Ford Motor, said the July 27 proposal by Senators Chuck Schumer and Joe Manchin would account for 70% 72 US electric, hybrid and fuel cell electric vehicles are not eligible for the trip.

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“No one would qualify for full credit when additional sourcing requirements take effect,” he said.

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

Without the tax break, vehicles become more expensive for US consumers, which can affect demand and sales. It could also slow progress towards President Joe Biden’s goal of having half of all new vehicles sold in 2030 electric or plug-in hybrid models.

An analysis conducted on Wednesday by the Congressional Budget Office suggested that only 11,000 new electric vehicles would benefit from the loan in 2023. read more

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

“I don’t believe we should build a mode of transport on the backs of foreign supply chains,” Manchin said on Tuesday.

The bill includes increasing requirements on the percentage of North American battery components based on value. After 2023, it would prohibit the use of the battery with any Chinese components.

“More gradual introduction of battery components, critical mineral and final assembly requirements – which better reflect the current geopolitical realities of mineral sourcing and mining – will retain the merit of millions of Americans,” wrote Bozzella.

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

The new EV tax credits, which will expire in late 2032, will be limited to trucks, vans and SUVs with a suggested retail price of $ 80,000 or less, as well as cars under $ 55,000. They will be limited to families with adjusted gross income up to $ 300,000 per year.

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Reporting by David Shepardson; Edited by Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

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