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Democrats unveil new EV tax credit proposal with boost for unions

Riley Beggin, The Detroit News on

Published in Automotive News

WASHINGTON — Democrats in Washington want to include a significant new incentive to buy electric vehicles in their $3.5 trillion social spending bill, according to a new plan revealed Friday by the House Ways and Means Committee.

For five years, the legislation would implement $7,500 point-of-sale consumer rebates for electric vehicles and pay out an additional $4,500 for vehicles assembled in a union facility. Another $500 would be awarded for vehicles using a battery manufactured in the U.S.

For the next five years after that, the $7,500 base credit would only apply to electric vehicles made in the U.S., but the other two incentives would stay the same.

"We want to make sure that people who make good wages, support their families and contribute those wages and benefits in their community are the primary beneficiaries of this," said Rep. Dan Kildee, D-Mich., who serves on the Ways and Means Committee and has been pushing the legislation in the House.

The first five years should incentivize EV adoption and domestic battery production, while the latter half should narrow it down to domestic producers, he said.

"We think that gives everybody ample time to understand that when it comes to the American tax dollar, we're not going to do this in a way that is so disruptive to the market," Kildee said.

 

But "within five years we're making it clear these dollars are going to people who make good wages in American factories, and that's where the American tax dollar should go."

The legislation also seeks to bar the wealthiest Americans and luxury vehicle producers from benefitting from the program by setting caps on income and sale price to qualify.

Sedans under $55,000, vans under $54,000, SUVs under $69,000 and pick-up trucks under $74,000 would be eligible for the credits. Individuals with an adjusted gross income of up to $400,000, heads of households making up to $600,000 and joint filers making up to $800,000 would be able to use the program.

The income caps are significantly higher than that proposed by Senate Republicans, who voted in a non-binding amendment in August to stop buyers from claiming credits if they make more than $100,000 annually or if the vehicle costs more than $40,000.

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