Electric vehicle tax credits in Biden’s Build Back Better Act will help sell more cars than new chargers
President Joe Biden speaks during a visit to the General Motors Factory ZERO electric vehicle assembly plant in Detroit on Wednesday, November 17, 2021.
Evan Vucci | AP
DETROIT – Now that President Joe Biden’s $ 1 trillion infrastructure bill is in place, Democrats are aiming for his Build Back Better Act to further advance the government’s agenda for electric vehicles.
The bipartisan Infrastructure Investment and Employment Act provides $ 7.5 billion to boost Biden’s goal of 500,000 electric cars nationwide by 2030 to fuel consumer demand for electric vehicles.
“The infrastructure bill that the president signed this week is a critical step in investing in our future,” said Senator Debbie Stabenow (D-Mich.) During an event to celebrate GMC Hummer EV production with Biden in Detroit. “Now let’s focus on the next step.”
The event at General Motors Factory Zero was largely a parade of Michigan Democrats promoting Build Back Better and using the upcoming Hummer production as a soap box to advertise unionized vehicles.
“With this infrastructure bill, we will use my Build Back Better plan to boost the production and recycling of new batteries, materials and parts, and boost the production of cleaner vehicles with new loans and new tax breaks,” Biden said during the event. “Incentivizing consumers to purchase US-made, union-made clean vehicles like the electric Hummer.”
The $ 1.75 trillion Build Back Better bill is now being submitted to the Senate, where it is likely to be revised in the coming weeks. Senate Majority Leader Chuck Schumer said he wanted the Chamber to pass the bill before Christmas. The House will have to vote again if the bill is changed.
The proposed Build Back Better EV incentive includes a current tax credit of $ 7,500 for buying a plug-in electric vehicle, plus $ 500 if the vehicle’s battery is made in the U.S. Union Work, the heavy criticism from non-Detroit – attracted car manufacturers whose American workers are unorganized.
Toyota Motor has described the unionized incentive as “obviously biased” and “wrong”. Tesla CEO Elon Musk has also heavily criticized the incentive, heavily criticizing Biden for his support for unions such as United Auto Workers, which represents factory workers for Detroit automakers.
The tax credits, which support advanced technologies that generally benefit wealthier Americans, have always been controversial, but the requirement that a portion of the $ 12,500 go to unionized electric vehicles fueled partisan tensions. Biden has not apologized for supporting the unions.
“We have to focus on what the nation has done great. I have no problem with Wall Street bankers and others, ”Biden said on Wednesday. “But they didn’t build America. The middle class built America and the unions built the middle class.”
Under the bill, individual taxpayers will report adjusted gross earnings of $ 250,000 or $ 500,000 for joint applicants to receive the new electric vehicle tax credit. It would also limit EV credits to cars priced no more than $ 55,000 and trucks and SUVs up to $ 80,000.
“More critical bill”
BofA Global Research analyst John Murphy described the infrastructure package as “only modest support” for the auto industry to move towards electric vehicles. He said the $ 12,500 tax credits for an electric vehicle purchase are more important to drive adoption.
“As mentioned earlier, the Biden administration’s Build Back Better agenda is the more critical bill setting regulatory support for the electrification revolution in the US,” Murphy wrote in an investor note last week.
US President Joe Biden gesticulates after he died on Jan.
Jonathan Ernst | Reuters
Traffic officials touted the Build Back Better as an important part of Biden’s plan last week along with the new infrastructure package to meet the president’s electric vehicle sales target. He wants half of all new vehicles sold to be electric vehicles by 2030, including plug-in hybrid electric vehicles with EV batteries and traditional internal combustion engines.
Goldman Sachs analyst Mark Delany believes such EV incentives could “make the total cost of buying a vehicle more compelling and largely benefit automakers” by making their products more affordable to consumers.
The infrastructure package now only covers part of the funds that are required to set up a truly comprehensive charging network.
The $ 7.5 billion is only about 15% of the consulting firm AlixPartners’ $ 50 billion projected to meet Biden’s goal of a nationwide network of 500,000 chargers by 2030.
Buildings that require a wide variety of public and private sector investments, experts say. You characterize the infrastructure package as a positive step in the right direction.
“It certainly won’t all come from the government,” said Mark Wakefield, global co-head of automotive and industrial practice at AlixPartners. “I think there will probably be more of companies using utility companies, automakers, charging companies, convenience stores, gas stations that are installing chargers … The fact that they are investing in is a good thing.”
Before Biden signed the infrastructure package, US Secretary of Transportation Polly Trottenberg said the goal of 500,000 charging stations was “ambitious”.
“We stand by our goal. Our goal is to have 500,000 EV chargers by 2030. Of course, this requires strong partnerships at the state and local level as well as with private providers, ”she said last week when she called reporters. “It’s an ambitious goal, but I think we won’t have a plan to get there even if we work with our partners in the Department of Energy.”
The DOT and DOE have set up a joint program office for the use of the funds under the Infrastructure Act, according to Christopher Coes, Deputy Deputy Secretary in the Office of the Deputy Secretary for Transport Policy.
DOT officials declined to estimate how many EV chargers they want to install with the $ 7.5 billion infrastructure bill. According to AlixPartners, the devices can cost between $ 120.00 and $ 260,000 for a level 3 “fast charger” installation based on their charging speed.
“The goals of our program are to find out how we build the market? How can we make sure we are investing in places that are not the first places private investors go, ”he said, citing city centers. Apartment buildings and along highways.
– CNBC’s Michael Bloom contributed to this report.