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Republican senator proposes ban on automakers 'double-dipping' incentives

Riley Beggin, The Detroit News on

Published in Automotive News

WASHINGTON — Republican Sen. John Thune of South Dakota recently introduced a bill that would stop automakers from "double-dipping" on federal incentives aimed at accelerating electric vehicle production.

The legislation stands little chance of passing in the Democrat-controlled Senate, but may be indicative of a GOP strategy to reverse some of Democrats' efforts to give a leg up to low-emission transportation should they retake Congress in the midterm elections.

The "Ending Duplicative Subsidies for Electric Vehicles Act" would make car companies choose between making their vehicles eligible for up to $7,500 in consumer tax credits or receiving grants or loans to support EV and battery production passed through the Inflation Reduction Act.

“American automakers have been on the receiving end of historic amounts of taxpayer money, yet we see them raising vehicle prices right when they’re preparing to receive even more government support,” Thune said in a statement. “Automakers shouldn’t be able to double-dip at taxpayers’ expense.”

Thune serves on the Senate Commerce, Science, and Transportation Committee, which oversees most auto-related policy that passes through the upper chamber.

The IRA included billions of dollars in subsidies for the growing electric vehicle industry. That included $10 billion for clean energy projects including EV production; $5 billion dedicated directly to EVs and hybrids; $500 million for critical mineral production; and the expanded tax credits for consumers.

 

The tax credit proposal tweaked existing $7,500 tax credits for EVs to make them accessible at the point of purchase for buyers, which allows people to experience them as a direct discount rather than a reimbursement on taxes at the end of the year. It also requires automakers to meet domestic content requirements to qualify and limited the credit to certain income groups and vehicle price points.

Electric vehicle prices have gone up over the last year, due in part to a continued shortage of microchips. Car companies have raised the prices of popular EV models such as the F-150 Lightning and Kia EV6, and dealers are charging steep markups to buyers who want an EV amid a global supply-chain crunch.

It comes as automakers are ramping up EV production, pouring billions into transforming their businesses to build zero- and low-emission vehicles rather than gas-powered ones. Democrats sought to accelerate that shift in the hopes of pushing prices down while forcing automakers to build domestic and ally-based supply chains.

But Republicans have raised concerns with that plan. Some have argued it's unfair to push EVs in a free-market economy; others have criticized additional federal spending as the nation experiences high levels of inflation or said the policies will only increase reliance on China, which dominates battery supply chains.

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