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

[jmatero]

Fortune and WSJ both reporting this morning that most North American-built vehicles (at the moment) wouldn’t be eligible for the tax credit because of Chinese-built components in battery packs.

Sponsored

 

[generaltso]

Fortune and WSJ both reporting this morning that most North American-built vehicles (at the moment) wouldn’t be eligible for the tax credit because of Chinese-built components in battery packs.

The "foreign entity of concern" (China prohibition) rules don't go into effect until 2024 (assembly) and 2025 (minerals).

 

[Mach1E]

The "foreign entity of concern" (China prohibition) rules don't go into effect until 2024 (assembly) and 2025 (minerals).

Yes, but the 40% domestic content part starts in 2023.

Either way, they are out.

 

[generaltso]

Yes, but the 40% domestic content part starts in 2023.

Correct, but we don't have enough data yet to know what that means for different manufacturers.

 

[dbsb3233]

Yes, but the 40% domestic content part starts in 2023.

Either way, they are out.

In addition to the North American assembly requirement that knocks a bunch of popular models out immediately.

In addition to the MSRP limits that knock some other popular models out at year's end.

 

[voxel]

Also income limits apply in 2023. If you can afford a GTPE and are not retired... you probably are hitting the income limits.

IRA is very much a "Buy American" bill.

 

[ridgebackpilot]

Many news outlets are reporting that the renewed EV Federal income tax credit will be available "at the point of purchase". What does that mean? I don't understand how you could get an income tax credit at the time or point of purchase?

In the past, I've always claimed tax credits when I file my income tax return for the year in question...

 

[DennisD]

Many news outlets are reporting that the renewed EV Federal income tax credit will be available "at the point of purchase". What does that mean? I don't understand how you could get an income tax credit at the time or point of purchase?

In the past, I've always claimed tax credits when I file my income tax return for the year in question...

I am not totally sure but I think it is more of a rebate as opposed to a tax credit. Similar to a rebate at a Menards or something similar. It doesn't make a difference of your income, you will get the "rebate" taken off the point of sale.

My guess is that it would be much better for the consumer especially in States that you pay a sales tax on. It basically lowers that amount as well if you are dishing out a lower amount on the POS.

Once again, that is what I think it is.

 

[ridgebackpilot]

I am not totally sure but I think it is more of a rebate as opposed to a tax credit. Similar to a rebate at a Menards or something similar. It doesn't make a difference of your income, you will get the "rebate" taken off the point of sale.

My guess is that it would be much better for the consumer especially in States that you pay a sales tax on. It basically lowers that amount as well if you are dishing out a lower amount on the POS.

Once again, that is what I think it is.

I hope you're right! However, after January 1, 2023, I won't qualify for the tax credit because of my income. And according to the Alliance for Automotive Innovation, only 25 of the 75 EV models currently on the market will qualify for the tax credit next year. That's a 70 percent drop in vehicle eligibility!

https://www.autosinnovate.org/posts/blog/what-if-no-evs-qualify-for-the-ev-tax-credit

 

[DennisD]

I hope you're right! However, after January 1, 2023, I won't qualify for the tax credit because of my income. And according to the Alliance for Automotive Innovation, only 25 of the 75 EV models currently on the market will qualify for the tax credit next year. That's a 70 percent drop in vehicle eligibility!

https://www.autosinnovate.org/posts/blog/what-if-no-evs-qualify-for-the-ev-tax-credit

Manchin came on board late to the game and left very little time to "fine tune" the Bill. I would be willing to wager that there will be amendments proposed through the backing of many of the major auto manufacturers and both sides of the aisle will have some "economic push" to get more vehicles included in the rebates.

I could be wrong but the lobby with the most to lose, will argue for the most to gain.

These don't take effect until 2023 and there will be some rewording to make it work in the end.

I guess we will need to wait and see.

 

[Mach1E]

Many news outlets are reporting that the renewed EV Federal income tax credit will be available "at the point of purchase". What does that mean? I don't understand how you could get an income tax credit at the time or point of purchase?

In the past, I've always claimed tax credits when I file my income tax return for the year in question...

If they still are calling it a “tax credit,” all that means is that they’ll give it to you up front, but then you may be giving some or all of it back when you file your taxes next year.

It’s the same way health insurance credits work for the Affordable Care Act.

The ACA used to have a similar “tax torpedo” where $1 in extra income could cost you hundreds or thousands in taxes……. But they fixed it last year with a prorated scale.

Apparently they didn’t learn their lesson about how bad a hard line “all or nothing“ income limit is.

 

[Caulk-E]

Manchin came on board late to the game and left very little time to "fine tune" the Bill. I would be willing to wager that there will be amendments proposed through the backing of many of the major auto manufacturers and both sides of the aisle will have some "economic push" to get more vehicles included in the rebates.

I could be wrong but the lobby with the most to lose, will argue for the most to gain.

These don't take effect until 2023 and there will be some rewording to make it work in the end.

I guess we will need to wait and see.

https://arstechnica.com/cars/2022/0...in-stands-in-way-of-ludicrous-ev-tax-credits/

Yeah…I won’t be holding my breath. With republicans set to take over at least the house and manchin firmly against EV credits, I personally don’t think we’ll see any changes or amendments to the EV credit. The strict requirements were written that way because they were intentional. Manchin wanted to eliminate the EV credit without appearing like they he was against climate change.

Also, if the automobile manufacturers lobby was powerful enough, they would’ve forced senators to make changes during the Vote-a-Rama. I think people forget that for most manufacturers, EV sales only account for 5% of their total revenue. Why would they waste lobbying money for such a small piece of the pie.

 

[DennisD]

https://arstechnica.com/cars/2022/0...in-stands-in-way-of-ludicrous-ev-tax-credits/

Yeah…I won’t be holding my breath. With republicans set to take over at least the house and manchin firmly against EV credits, I personally don’t think we’ll see any changes or amendments to the EV credit. The strict requirements were written that way because they were intentional. Manchin wanted to eliminate the EV credit without appearing like they he was against climate change.

Also, if the automobile manufacturers lobby was powerful enough, they would’ve forced senators to make changes during the Vote-a-Rama. I think people forget that for most manufacturers, EV sales only account for 5% of their total revenue. Why would they waste lobbying money for such a small piece of the pie.

Because that "slice" will soon turn into an entire pie.

 

[ARK]

https://arstechnica.com/cars/2022/0...in-stands-in-way-of-ludicrous-ev-tax-credits/

Yeah…I won’t be holding my breath. With republicans set to take over at least the house and manchin firmly against EV credits, I personally don’t think we’ll see any changes or amendments to the EV credit. The strict requirements were written that way because they were intentional. Manchin wanted to eliminate the EV credit without appearing like they he was against climate change.

Also, if the automobile manufacturers lobby was powerful enough, they would’ve forced senators to make changes during the Vote-a-Rama. I think people forget that for most manufacturers, EV sales only account for 5% of their total revenue. Why would they waste lobbying money for such a small piece of the pie.

Agreed, for better or worse, this law seems to be locked in as is for the foreseeable future.

 

[Caulk-E]

Because that "slice" will soon turn into an entire pie.

I'm with you. I hope that's the case because my Mach-E is the most incredible car I've ever own, even better than the Model 3. But obviously there are tremendous forces out there working against full EV adoption, like this current EV tax credit bill. It's not doing EVs a favor with all these stipulations. There's a reason we don't build a lot of things in the USA. Your iPhone would be $3,000 dollars. People love made in USA but they're unwilling to pay for it. I predict that these EV credit qualifying vehicles will be more expensive than your non-US built EVs. Not because the manufacturers want to take your $7,500 credit and pad their profits, it's going to be because it'll cost more to manufacture in the US due to minimum wage requirements.

Sponsored