Senate Bill Deal to Expand EV Tax Credits (7/27/2022)

[Regulus7]

It’s called the Inflation Reduction Act. It will also need Sinema’s support. I’m not sure that it is a reconciliation bill so may need to get Republican support, too. Will try to confirm. Includes right for Medicare to negotiate drug prices and minimum tax of 15% on corporations with $1B of book profits which could be difficult to vote against.

This is reconciliation. So they just need 50. Given the outlook for November, this is the last potential legislation that Schumer/Pelosi have any chance of doing before they give up their gavels.

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[yngwenli]

If this passes, it will be really bad for Rivian. They would have had several years of credits left, but now all their vehicles over $80k won’t qualify at all. The same is true for the higher trims of the F-150 Lightning, but Ford was going to run out of credits after next year anyway.

Yeah, I've stated here before that I'm not a fan of changing the EV tax game and giving Tesla/GM more "help" since Tesla at least, has a big headstart which they clearly don't need.

I agree with all the other posters that new EVs never had a problem of buyers, just low supply and everything is pretty much sold already. No incentives didn't make Tesla's less desirable since a LOT of people still bought them and are buying them.

This hurts other manufacturers like Rivian, Lucid, Porsche, Audi, Subaru, etc...with less compelling products vs. the competition (looking at you Subaru).

I agree that used EVs should have a tax credit though since the tax needed to get it was not fair for folks of lower means.

 

[yngwenli]

The next question is (same as back in Nov/Dec): Does the Mach-Es over $55K qualify? Is the Mach-E considered a station wagon or SUV by the the IRS?

It's a SUV in 2022 models now...Long fight/discussion here.

 

[generaltso]

Ford has already worked this out. The EPA and U.S. Department of Energy have determined that the 2022 MachE is a SUV for energy fuel economy, CAFE standards and IRS 30(D) aka EV Tax Credit purposes. Therefore the $80,000 cap will apply to the 2022 and 2023 MachE.

Hmm, yeah it looks like they changed it for the 2022 model year. I guess this is no longer an issue.

 

[generaltso]

I’m not sure that it is a reconciliation bill so may need to get Republican support, too.

If this wasn't reconciliation, Manchin's support wouldn't matter because it would already be dead.

 

[dbsb3233]

This will be a great time to figure out if the people writing tax laws understand how taxes work.

If it’s still a a nonrefundable tax credit and it’s only for lower income individuals….. maybe no one will get the full credit. ?

A few recent examples of blunders-

2020- 0-16 yr olds parents got a COVID check in the mail. 18+ got their own checks. 17 year olds? Apparently the government hates them and they get nothing.

ACA- in many states* there are a large group of people who are “too rich for Medicaid” but “too poor for ACA subsidies.” No healthcare for you!

*Technically all states. Medicaid is income AND asset based. ACA is income based only. The two were never designed to work together properly.

Yep. This bill has so many manipulative triggers in it that it's really gonna piss a lot of buyers off. The old subsidy was pretty straightforward -- $1.5B of customer subsidy to each manufacturer (200k units @ $7500 each). Reasonably fair and consistent (as massive subsidies go).

But what may replace that looks like a mess. Like the classifications between cars vs SUVs/trucks. That didn't matter before, but now it's huge. Lots of people gonna be angry that two different crossovers that are extremely similar will be classified differently, one qualifying at $56k, the other not.

This scheme would not just add some new subsidies, but it's also gonna take some away. All those automakers currently well under 200,000 sales are gonna lose the subsidy for their $60k EVs that they planned for when designing their models for the last 3 years.

Government manipulation at it's worst.

 

[dbsb3233]

The already past infrastructure bill does this. Tesla is using some of this money to add CCS connectors to it's existing and to be installed supercharger stations. Tesla will take government handouts whenever they can. All the big EV chargers will be adding DCFCs with this government handout. Will be good for us EV owners.

Seems like that was focused on DCFC though. That's already been growing by leaps and bounds with lots of expansion plans already in place, as have been the vehicles. The "3rd frontier" (so to speak) is L2 charging at apartments/condos. That's a crucial component for 40% of the market, and there's very little focus on it yet. IMO, that's where they should have focused instead. And just let the vehicle subsidies phase out as originally planned (with the 200,000 limits).

 

[Keeperofthe7keys]

This will be a great time to figure out if the people writing tax laws understand how taxes work.

If it’s still a a nonrefundable tax credit and it’s only for lower income individuals….. maybe no one will get the full credit.

Exactly, current one doesn't help those who need it most but non-refundable with an income limit that's too low would just makes it entirely useless.

*Technically all states. Medicaid is income AND asset based. ACA is income based only. The two were never designed to work together properly.

Well, that's because we were supposed to get universal Healthcare instead of that disappointment lol. We have experts in government but almost none of them are politicans.

 

[Orangefirefish]

Exactly. This is just a wealth transfer from the taxpayers to auto manufacturers who have already benefited from the 200K cap. It spurred them on at the beginning, which was the intention, and they’ve gained a foothold in the market which is a large advantage for the future. Job done. Leave the rest to capitalism. The last thing we need is incentivizing more people to sell like new, perfectly good, fuel efficient ICEs just to get an EV. This is where I feel a clunkers trade in incentive makes the most sense. Retire a dirty vehicle at the end of its service life, next vehicle can be an EV. That way manufacturers don’t jack up the price to capture the credit, and that way we responsibly transition people to EVs at a sustainable pace.

Yeah, I've stated here before that I'm not a fan of changing the EV tax game and giving Tesla/GM more "help" since Tesla at least, has a big headstart which they clearly don't need.

I agree with all the other posters that new EVs never had a problem of buyers, just low supply and everything is pretty much sold already. No incentives didn't make Tesla's less desirable since a LOT of people still bought them and are buying them.

This hurts other manufacturers like Rivian, Lucid, Porsche, Audi, Subaru, etc...with less compelling products vs. the competition (looking at you Subaru).

I agree that used EVs should have a tax credit though since the tax needed to get it was not fair for folks of lower means.

 

[mjs020294]

The EPA currently clssifies the Mach E as an SUV.

 

[Mach1E]

It’s called the Inflation Reduction Act. It will also need Sinema’s support. I’m not sure that it is a reconciliation bill so may need to get Republican support, too. Will try to confirm. Includes right for Medicare to negotiate drug prices and minimum tax of 15% on corporations with $1B of book profits which could be difficult to vote against.

Inflation reduction act???

That’s hilarious! ?

I’d love to hear the explanation how spending money and raising taxes reduces inflation.

Might as well call it the “tax reduction act” or “spending reduction act.” Both would be equally true.

 

[jaklou]

I doubt they would do it, but it would be funny if they lowered the amount and then made it retroactive to this tax year, screwing over the flippers.

How would it affect flippers? I don’t see anything that restricts them from doing so, at least in the articles I’ve read

 

[jaklou]

The new bill has to make Hyundai unhappy with the rollout of the Ioniq 6, which is clearly a sedan

 

[dbsb3233]

How would it affect flippers? I don’t see anything that restricts them from doing so, at least in the articles I’ve read

Yeah I wonder how that $4000 used car subsidy works? Seems like a really bad idea. People will figure out quickly if they can just keep selling their EV back and forth between their spouse and suck down $4000 each time.

Maybe it's limited to only dealer sales? But that would be grossly unfair to private sellers.

"Grossly unfair" looks like a common theme in this turkey.

 

[timbop]

The tax credit is baloney when it comes to consumers. It will benefit the manufacturers and in turn the shareholders.

YES. And that is absolutely the point: to spur manufacturers to make compelling BEVs people will buy instead of ICE cars - which account for 96% of new car sales.

All the big EV chargers will be adding DCFCs with this government handout. Will be good for us EV owners.

Correction: it will be good for current EV owners and alleviate the concerns of FUTURE buyers who are on the fence. We all know the #1 argument people have against getting a BEV is that they're too expensive, and #2 is charging locations.

GM is doing that, even without this. The first new battery factory in Lordstown starts operations in August, and they have two other battery factories being built.

I agree with all the other posters that new EVs never had a problem of buyers, just low supply and everything is pretty much sold already. No incentives didn't make Tesla's less desirable since a LOT of people still bought them and are buying them.

And all of those project will fail if demand for BEVS only goes up to 6% or 8% of the market. That is, today we are supply limited but the demand isn't actually very large relative to the overall new vehicle market. These incentives are intended to push much more demand than currently exists.

This hurts other manufacturers like Rivian, Lucid, Porsche, Audi, Subaru, etc...with less compelling products vs. the competition (looking at you Subaru).

Again, the point is to push manufacturers to make compelling vehicles that people want to buy, not compliance cars that capture .01% of the market. In a 10 year span Ford sold 125,000 EVs in the US. Now that they've made competitive vehicles they'll be selling that many this year. If Subaru or Stellantis go out of business because the continue to emphasize crappy ICE vehicles and half-ass their EV development, then good riddance.

The end goal isn't to spur the auto industry, it's to significantly cut the 6 million tons of CO2 and untold tons of leaked methane emitted by the US every year.

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