Senator Joe Manchin called into question the need for an expanded electric vehicle tax credit during a Senate budget hearing on Thursday, arguing this portion of the federal budget would be better spent on developing hydrogen solutions for heavy transportation sectors.
Manchin, a West Virginia Democrat, questioned whether or not the tax credits were necessary given the current demand for EVs and the production backlog many automotive manufacturers are currently facing.
“There’s a waiting list for EVs right now with the fuel price at $4. But they still want us to throw $5,000 or $7,000 or $12,000 credit to buy electric vehicles,” Manchin said, as quoted by Reuters. “It makes no sense to me whatsoever. When we can’t produce enough product for the people that want it and we’re still going to pay them to take it – it’s absolutely ludicrous in my mind.”
The Senate Finance Committee last year proposed a $259.5 billion clean energy tax credit package, which included $31.6 billion in consumer incentives for electric vehicles. Under this proposed system, EV buyers would qualify for as much as $12,500 in tax credits if the car is assembled in the United States by a unionized workforce. The bill indicated the credits would expire once battery-electric or fuel cell vehicles achieve 50 percent market share in the U.S.
The proposed package would also make vehicles from companies like GM and Tesla, both of which have passed the 200,000 unit threshold, to once again qualify for federal tax breaks.
Transportation Secretary Pete Buttigieg, who testified at Thursday’s hearing, defended the Biden Administration’s proposed EV tax credits, saying the White House feels “an enormous sense of urgency to accelerate not the just the uptake of electric vehicles, but as you note, their production and our productive capacity for them.” EV tax credits are intended to drive demand for battery-electric vehicles, as the relative purchase price remains high compared to an equivalent internal combustion engine product.
Companies like GM and Ford have seemingly had little trouble generating demand for their electric vehicle offerings thus far. GM, for its part, has raised its production targets for both the GMC Hummer EV Pickup and the Cadillac Lyriq, and has also received more than 140,000 pre-orders for the Chevy Silverado EV in only a few short months.