Washington Watch

Sept. 17, 2021, 4:08 p.m. EDT

House Democrats plan EV tax credits of up to $12,500, as Republicans, Tesla, Toyota voice objections

By Victor Reklaitis

The Democratic-run House Ways and Means Committee’s proposals for the party’s $3.5 trillion spending package include new tax credits for electric vehicles, as Washington continues to push for a shift away from gasoline-powered cars.

But aspects of the proposed incentives are drawing criticism, with Republican lawmakers charging that they would help wealthy Americans, and some automakers objecting to an extra boost for Detroit’s Big Three car companies.

The current $7,500 EV tax credit, which allows taxpayers to deduct part of the cost of buying an electric car, phases out once an automaker hits 200,000 cumulative EV sales, and both Tesla  (NAS:TSLA) and General Motors  (NYS:GM) already have sold more than 200,000 electric vehicles.

Under the new proposal , that cap of 200,000 would go away, so buyers of EVs from Tesla and GM would get credits again.

In addition, the credit rises by $4,500 for union-made vehicles assembled in the U.S., with another $500 for cars that have at least 50% domestic content, along with batteries made in the U.S. So the total possible credit can be as high as $12,500.

Other provisions say the credits won’t go to EVs if their price tags exceed certain levels — $55,000 for sedans, $64,000 for vans, $69,000 for SUVs and $74,000 for pickup trucks. And taxpayers won’t get the credit if they make over $400,000 a year, with an upper limit at $800,000 for couples and $600,000 for those who file as “head of household.” And starting in 2027, the incentives will go only to vehicles made in the U.S.

Supporters of the Ways and Means Committee’s proposal for the new EV tax credits range from the Sierra Club and the United Auto Workers to the Big Three — Ford (NYS:F) , GM and Chrysler parent Stellantis (NYS:STLA) .

“What do environmental groups, automakers and workers have in common? They all support my bill to expand electric vehicle production in the U.S. to help create good-paying jobs and reduce emissions,” tweeted Democratic Rep. Dan Kildee of Michigan, a Ways and Means Committee member who has championed the EV tax credits.

Related: Auto industry’s future ‘is electric, and there’s no turning back,’ Biden says, as he touts EV goal

The Republican criticisms have included Rep. Carol Miller of West Virginia tweeting that it’s “hard to imagine how giving a tax break of $12,500 to someone buying a $74,000 electric vehicle is a way to help working class workers.”

GOP Rep. Drew Ferguson of Georgia proposed an amendment that would have cut the maximum income for the EV credit to $75,000 for individuals and $150,000 for couples, but his change wasn’t adopted.

“This measure makes common sense, will save the taxpayers money, and will prevent a massive giveaway to the wealthy. Democrats still BLOCKED it,” Ferguson tweeted .

Meanwhile, Tesla CEO Elon Musk, whose factories aren’t unionized, has slammed the provision that gives the additional $4,500 credit for union-made EVs as “ written by Ford/UAW lobbyists , as they make their electric car in Mexico,” adding that it’s “not obvious how this serves American taxpayers.”

Related: White House says Tesla not invited to August event because it’s focused on 3 biggest employers of UAW members

Toyota (NYS:TM) and Honda (NYS:HMC) , also with non-union workforces, have spoken out against that provision as well. Toyota said in a letter to lawmakers that it “makes the objective of accelerating the deployment of electrified vehicles secondary by discriminating against American autoworkers based on their choice not to unionize.” In a similar vein, Honda said it “discriminates among EVs made by hard-working American auto workers based simply on whether they belong to a union.”

Now read: Debt limit, social spending, infrastructure battles loom in ‘uniquely frenetic period’ for Congress

And: House Democrats want tax hikes that are ‘a little less aggressive’ than those proposed by Biden

Plus: Oil industry avoids pain in House Democrats’ tax plan, but tobacco, vaping get hit

This report was first published on Sept. 16, 2021.

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