Senators Chuck Schumer and Joe Manchin have reached a deal that will see consumer EV tax credits included in a broader legislative package that contains roughly $369 billion worth of climate and energy spending.
The new tax credit plan is expected to do away with previously proposed provisions that would have offered additional tax credits to American EVs that were built in a unionized production facility. Instead, the tax credit will offer additional financial support to those who purchase an EV with batteries that contain a certain percentage of material from U.S. free trade partners, according to Global News. The legislation has yet to pass.
The Biden Administration’s proposed EV tax credit plan received pushback from a lobby of foreign automakers that included Volkswagen, Toyota, Hyundai, Nissan, Kia, Mercedes-Benz, Mazda, Subaru and Volvo, which claimed the plan would unfairly disadvantage non-unionized American workers. Tesla CEO Elon Musk also hit back against the proposal, saying it would unfairly disadvantage his company, which is the largest producer of EVs in America and operates non-unionized production facilities.
Manchin had also previously called the idea of incentivizing EV purchases with federal money “ludicrous,” given the current demand for new vehicles and inventory challenges that most automakers are facing. The new $700 billion agreement between Schumer and Manchin, dubbed the Inflation Reduction Act of 2022, includes various spending measures to help address climate change. In a statement released late Wednesday, the two senators said the investments mentioned in the legislation “will be fully paid for by closing tax loopholes on wealthy individuals and corporations.”
“The Inflation Reduction Act of 2022 will make a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030,” the statement also said.