The Federal EV tax credit proposes savings of up to a $7,500 with the purchase or lease of a qualified vehicle, although its stipulations have been the subject of controversy as of late. Now, Senator Joe Manchin has proposed a new bill that would immediately end EV tax credits for vehicles that don’t satisfy Federal mineral and component requirements.
For some quick background, the U.S. Treasury delayed the implementation of new Federal EV tax guidance until March 2023, creating a grey area for several vehicles in the early stages of the new year. Among these vehicles are the Chevy Bolt EV and Chevy Bolt EUV, which technically qualify for the full $7,500 tax credit until March. However, if this bill were to pass, the Bolt models would only be eligible for half the credit, or $3,750.
“The IRA is first-and-foremost an energy security bill, and the EV tax credits were designed to grow domestic manufacturing and reduce our reliance on foreign supply chains for the critical minerals needed to produce EV batteries,” Manchin said in a statement. “Being an automotive powerhouse is in our blood which is why it is shameful that we rely so heavily on foreign suppliers, particularly China, for the batteries that power our electric vehicles. We cannot continue down this path.”
It’s worth noting that neither Democrats nor Republicans seem particularly interested in pursuing this proposed legislation.
As a reminder, the Inflation Reduction Act put restrictions on the $7,500 Federal EV tax credit to encourage U.S. production of battery packs for electric vehicles. Thus, EVs will need to meet two conditions in order to qualify for the full credit:
- Minerals – Beginning in 2023, 40 percent or more of the critical minerals used in batteries must be manufactured or assembled in North America. This percentage rises by 10 percent every following year.
- Components – Beginning in 2023, 50 percent or more of the value of the EVs battery components must be manufactured or assembled in North America. This percentage rises by 10 percent every following year.
It’s important to note that if only one of these requirements is met, the EV will receive half of the $7,500 credit. This means the Bolt EV and Bolt EUV will only qualify for savings of $3,750 after March, regardless of the outcome of the Manchin bill. Additionally, it’s worth noting that the Cadillac Lyriq will not be eligible for any credit as long as its base price is set above the $55,000 cap.
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Comments
Well duh!!!!! Wasn’t the whole point to make automakers invest in the USA? Why should taxpayers be on the hook to provide $7500 in tax dollars so someone can purchase an EV let alone an EV made in another country.
Taxpayers are not paying $7,500 for electric cars. The EV buyer will get a credit but only if they pay up to $7,500 in Federal taxes. This is wrong because many pay less and many pay no taxes because they are not in a State or Territory that mandate such taxes. So only the wealthy get that tax break. If the Feds want to give incentives, then make it a point of sale rebate for all.
While the taxpayers aren’t directly paying $7500 to electric car buyers, the taxpayer is still indirectly subsidizing the purchase. Those taxes not paid by the EV buyer, have to come from somewhere else, so ultimately other taxpayers are paying the taxes not being paid by the EV buyer. To borrow a phrase popular in Washington, the credit allows the EV buyer to avoid “paying their fair share in taxes”.
After buying their EV, they continue to be subsidized by other tax payers, by not having to pay the gas taxes the rest of us pay that maintain the roads and bridges they’re driving their EV’s on. And finally, the government is now using Federal tax dollars, the taxes the EV buyer has avoided paying through their tax credit, to build the electric charging infrastructure to charge the EV buyer’s car. If that isn’t an example of not paying their fair share, I don’t know what is.
As far as the wealthy getting a tax break on EV’s, starting this year, there’s an income cap for claiming the credit, ranging from $150,00 for single filers, to $300,000 for joint filers. But really, why should the government be using our tax dollars, to subsidize someone else’s purchase of a car, or anything else?
Please explain how “many pay no taxes because they are not in a State or Territory that mandate such taxes.” I don’t understand this statement, since the EV credit is on Federal taxes, and I don’t know of any state or territory that’s not subject to federal taxes.
I wish I could give you 100x thumbs up for the fair share reference…well said.
More lunacy people don’t realize what destruction that it will do to the water tables worldwide in places that are mining and it will be a permanent change in the water table tons of pollution irreversible unbelievable the mining is much worse than utilizing oil people are so ignorant unbelievable Nikita Khrushchev was right when he stated Americans are gullible
I don’t understand what you mean here? If you are not paying any taxes well then you don’t get the tax credit because you don’t have any tax liability! If you don’t have any tax liability, they don’t just hand you $7,500 for buying an electric car. The credit for the taxpayer is up to $7,500 on taxes that you owe. So, if you owe $6,000 in taxes you get a credit of $6,000. If you owe $9,000 in taxes you get a credit of $7,500. If you owe nothing in taxes, then you get no tax credit.
And here’s “GM fan” again, spewing his misinformation that Tax Credits does not mean Taxpayers are paying $7500.00 for Electric Cars. Hey, “GM fan” ….if some clown buying a BEV receives a “Tax Credit” that places the burden of those “forgiven taxes” squarely on the backs of the other 99% of the Taxpayers who have to “make-up” for the $7500.00 shortfall the BEV buyer received. Take Finance 101 and maybe you’ll get a clue !
So, if I read this right, domestic content doesn’t matter at all if the vehicle price is over $55k. So, if GM is sourcing a certain amount of materials domestically and a certain amount from over seas, can’t they just use the domestic material for the cheaper cars and the foreign content for the more expensive cars? Or is it based on a fleet wide average?
Thank you Sen. Manchin.
Old Joe is between a rock and a hard place.
Joe is a Democrat from West Virginia and the state was heavy Union Mine workers that supported Joe and Byrd.
Well now those who claim to be in the Democratic party are now against Gas, Oil and Coal three things Joes state depends on as they have little else. Yes they do have a Coast Guard Station in the mountains but that is another political story.
Joe is tying to remain a Democrat but by his next election he is either going to have to retire or become a Republican to survive.
This is all survival and the survival of the old school Democrat that got left behind from his party.
I expect Joe will swap parties soon as his state is no longer represented by those on the left and he may have to go get a real job if he sticks to the party he is in now.
As for the Tax deal most people as you can see so not really understand it. I have mixed feelings. I hate to see the government give away money like this but better this than some program for toad licking or research into seeing if a gray grasshopper is racist to a green one.
To be fair the government is forcing this on the consumer and MFG not of their own free will. This money should be coming from the pay roll of those who support and voted it in.
Go retro and make Mr Gore and Mr Kerry pay for it with the sale of their jets.
The attitude of some people towards EVs is absurd however the attitude of some towards ICEs is jus as bad. I think the perfection of Hybrids should get more support and the bad attitudes of many people need to just grow up and look at the whole picture and try to understand the opinions, fears and prejudices of others. I am a Corvette guy but if I had the money I’d buy a Porsche as well. I know Porsche guys who have said that they would never buy a Corvette and then show up with a dam Hellcat. Go figure!
That is the trouble as one it is an emotional topic foe enthusiast.
Add that to the fact the government is forcing this on us.
There are lies on both sides and aggression on both sides and it is leading to a lot of miss information and lies on both. The truth is somewhere lost in the middle.
Joe Manchin sold us totally out on the Inflation Reduction Act. He wanted his pipeline through West Virginia but the socialist greeniacs shut him down. McConnell got bamboozled because he got the Republicans to first approve the Semiconductor act and then Manchin got in bed with Schumer and put through the IRA but then Joey got shot down on Schumer’s promise to get him his pipeline. Actually, hard-working Americans ‘got the pipeline’ because the battery cars should only be for specific applications as anyone with integrity knows that each type of fuel has overall individual and societal advantages for different driving environments. Incidentally, you got ripped off for $12,000 for each battery car, $7,500 for first owner and $4,500 for seccond owner if buy it from a dealer (a dealer-those wonderful people who marked up the cars over MSRP during the last two years). Either the $12,000 comes directly out of your pocket as a loss of tax expenditures for other priorities or the debt is inflated and your children are saddled with it and the ever-growing interest on the debt. Remember to vote against Socialist and Marxist policies unless you want to live in Cuba or Venezuela.