October 27, 2021

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Congress eyes $4,500 boost to EV tax credits, but Tesla’s Elon Musk isn’t happy


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Electric car tax credits could be in for a significant boost — a $4,500 boost to be clear. That’s if a bill heading to the House Ways and Means Committee finds its way to final passage in the months to come. EV tax credit boosts typically elicit applause from automakers, but some of them, including Tesla, aren’t cheering this time.

The new bill would leave the current $7,500 credit in place, but tack on an additional $4,500 if an EV is built in the US and with union labor. The $4,500 boost also includes a $500 credit for using American-made batteries for EVs. Tesla does build cars in the US, but its workforce is not unionized. CEO Elon Musk said on Twitter this weekend, following news of the potential tax credit changes, “This is written by Ford/UAW lobbyists, as they make their electric car in Mexico. Not obvious how this serves American taxpayers.”

Tesla does not operate a public relations department to field requests for comment. 

In a statement, Kumar Galhotra, president of Ford’s Americas & International Markets Group, said, “This legislation will help more Americans get into EVs, while at the same time supporting American manufacturing and union jobs. As the automaker who assembles more vehicles in America than any other, Ford is doing our part to lead the electric vehicle revolution by investing tens of billions of dollars in EVs.” He added the F-150 Lightning and E-Transit will be built in Michigan and Missouri respectively.

The bill benefits the three major US automakers most; the United Auto Workers union represents Ford, General Motors and Stellantis workers. GM said in a statement, “We applaud Congressional efforts, particularly the leadership of Representative [Dan] Kildee, for championing these critical efforts to revise the EV tax credits that will benefit consumers and help build out domestic EV manufacturing and supply chains to support U.S. leadership in electrification.”

Stellantis did not immediately return a request for comment.

Read moreEV tax credits are just the start. EV subsidies may come next

It’s not just Tesla that’s upset with the potential changes, however. Reuters reported Monday on a letter Toyota sent to Congress noting its concerns with the potential change. The Japanese automaker, which operates a large nonunion workforce in the US, said the bill discriminates against American automakers not part of a union. It added this potential $12,500 tax credit would become “exorbitant tax breaks” to wealthy EV buyers. Toyota did not immediately return a request for comment.

The EV tax credit would be a nonrefundable credit, meaning the federal government does not cut a check for the balance if an EV owner is already due a refund on their taxes. Instead, an EV purchase can reduce a tax bill if a new EV owner owes the federal government after filing.

Should the bill pass, automakers will not be subject to credit caps any longer, which would still reintroduce tax credits for Tesla and GM vehicles. Both automakers passed the limit in accordance with current regulations. Even without union labor, Tesla, Toyota and other automakers would still be eligible for the current $7,500 credit.

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