The US federal government currently wants to include an increase in investments in electrification as part of a massive infrastructure bill.
It is unclear how the money will be spent, but we now hear that the tax credit on electric cars could rise to $ 10,000.
Last week, the Biden administration announced an outline of its infrastructure plan, including a summary of a planned $ 174 billion investment in electrification.
As part of the summary, the government has confirmed that it intends to reform the EV incentive program, which today consists of a $ 7500 tax credit on new electric vehicles up to a limit of 200,000 per manufacturer.
However, the summary remained vague about the reform – it only confirms that it will not only take the form of tax rebates, but also ‘discount on points of sale“And it will now for”US-made EVs. ”
Over the past few months and since the Democrats took a majority position in the federal government, several new reforms have been proposed to the EV incentive program to remove, among other things, the limit of 200,000 units per manufacturer.
Several Democrats have introduced the Growing Renewable Energy and Efficiency Now (GREEN) Act to reform the program.
In short, carmakers that have already met the threshold have access to a new $ 7,000 tax credit for 400,000 additional electric vehicles until a new phase-out period begins again.
Another bill, called the Electric Motors Act, has also been proposed, and it would eliminate the limit on actual volume and instead set a period of ten years to get the incentive.
It will also allow buyers to apply the credit at purchase instead of through a tax credit, but the latter will also be possible and over a period of five years if necessary.
The law on electric cars seems to be closer to what was announced in the summary of the infrastructure plan, but it is unclear what will actually become law.
Dan Ives, an analyst at Wedbush, one of the best judges following the electric vehicle market, says the rumor in Washington is that the new incentive will amount to $ 10,000. [via Yahoo Finance]:
We hear from our contacts in the Beltway that $ 7,500 tax credit could possibly be $ 10,000 in terms of a credit, and that would be a huge catalyst, not only for Tesla, but also for the EV ecosystem in the US.
If the rumor is true, it is likely to increase sales of electric vehicles in the US significantly.
Electrek’s Take
Ives says it’s going to be a “massive catalyst” for Tesla and others in the EV industry in the US, but I think Tesla will be by far the biggest winners here.
We have to keep in mind that Tesla is now the largest seller of electric vehicles in the US, although buyers do not have access to the $ 7,500 tax credit, while most of the competition does.
I can not imagine what kind of lead they could build if they not only gained back access but also increased the incentive to $ 10,000.
However, I must think that the reform will also impose a restriction on the selling price of electric vehicles.
This is not something that has been much discussed lately, but it has been done in many other markets where EV incentives are offered, including Canada.
A limit of $ 45,000- $ 50,000 can make things more balanced, while still having a very positive effect on demand for EV in the US.
What do you think? Let us know in the comments below.
FTC: We use revenue to earn automatically affiliate links. More.
Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.