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WASHINGTON, July 28 (Reuters) - Automakers and U.S. lawmakers on Thursday were closely reviewing details of a proposed expansion of the electric vehicle tax credit that could help retool factories to build green vehicles and cut greenhouse gas emissions.

Under a deal announced by Senator Chuck Schumer, the 200,000-vehicle per manufacturer cap on the $7,500 EV tax credit would be lifted and a new $4,000 used EV tax credit adopted. Lawmakers and automaker executives want to know more about whether content sourcing requirements will bar many if not all EVs from getting tax credits and if consumers will be able to use it at the time of sale.

The new EV tax credit would be subject to rising annual sourcing requirements for critical minerals and components used in batteries. Congressional aides and automakers said the provisions were aimed at China, which produces much of the world's critical minerals for batteries.

"The basic structure I am fine with," Representative Dan Kildee told Reuters. He wants more details on "our ability to source these materials... "We need to make sure it is workable and it does what we intended."

Schumer told reporters the EV provisions would account for a "very small" amount of the anticipated 40% reduction in emissions expected from the bill.

Schumer said Manchin had "some real disagreements" about the EV tax credit "so we tried to come to a compromise. It's not everything I would want."

General Motors (GM.N), which has pushed Congress to lift the cap, said it would "review the draft text and look forward to working with Congress on these provisions that would ensure a level playing field."

The bill also includes billions in new loans and grants for auto production, including a $10 billion investment tax credit to build clean-technology manufacturing facilities, $2 billion in cash grants to retool existing auto manufacturing facilities and up to $20 billion in loans to build new clean vehicle manufacturing facilities.

Last year, President Joe Biden proposed boosting EV tax credits to up to $12,500 per vehicle -- including $4,500 for union-made vehicles -- and eventually making the credits apply only to U.S. made vehicles.

The Schumer Manchin proposal dropped the union and U.S. production requirements. It keeps the maximum credit at $7,500 per EV. Canada on Thursday hailed the revised bill that does not include the U.S-only provision.

The bill includes rising requirements for the percentage of North American battery components by value and would disallow any batteries after 2023 with any Chinese battery components. Some auto executives the timelines for requirements are too aggressive and will prevent use of the credit.

Automakers including GM and Tesla (TSLA.O) hit the cap and are no longer eligible for the existing EV tax credit while Toyota Motor Corp (7203.T) said this month it has hit the cap, which means its credit will phaseout in 2023.

The new EV tax credits would be limited to trucks, vans and SUVs with suggested retail prices of no more than $80,000 and to cars priced at no more than $55,000. They would be limited to families with adjusted gross incomes of up to $300,000 annually.

Biden's target is for EVs to comprise half of all new vehicles sold in 2030.

Zero Emission Transportation Association Executive Director Joe Britten said the EV credit is "going to be a huge accelerant to invest" in production of U.S. batteries and critical minerals.

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The new EV tax credits would be limited to trucks, vans and SUVs with suggested retail prices of no more than $80,000 and to cars priced at no more than $55,000. They would be limited to families with adjusted gross incomes of up to $300,000 annually.
I do think the credits should be abandoned but I hope there is some language in the actual legislation for a trigger to end this credit At least they put some caps on it too and I like that they are limiting China. But it is a little ironic that an unrelated picture of a new BEV Amazon delivery truck is heading off this article. What kind of subsidies will Amazon get out of this? I'm thinking Amazon needs no subsidies.
 

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You don't need to be rich to get the EV tax credit, especially if they do pass the $4,000 one for used EV's. I'm not advocating that the credits still exist as I feel that EV's can sell on their own merits, but not all EV's are $100K+ Teslas, Lucids or Porsches, some are cheaper little Fords, KIA's and Chevy's. The average price of a new car (ICE, not EV), is $48,000 and some EV's are well below that so it's possible. If they pass the used EV tax credit, that price can get down to half the cost of the average new car, sometimes less depending on where you live.
 

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I do think the credits should be abandoned but I hope there is some language in the actual legislation for a trigger to end this credit At least they put some caps on it too and I like that they are limiting China.
Agreed, not a fan of incentives that disrupt the free market. I am glad there is a price cap on it, we shouldn't be incentivizing Premium/Luxury EV's. Also China provisions don't hurt.

I do think plug-in hybrids would serve the overall macro market better than pure EV for the forseeable future, so hopefully they continue to qualify as part of this proposal. Plug-in hybrid Traverse/Tahoes would save a ton of gas/emissions over the life of the vehicle, which is the goal.
 

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Discussion Starter · #10 ·
I do think the credits should be abandoned but I hope there is some language in the actual legislation for a trigger to end this credit At least they put some caps on it too and I like that they are limiting China. But it is a little ironic that an unrelated picture of a new BEV Amazon delivery truck is heading off this article. What kind of subsidies will Amazon get out of this? I'm thinking Amazon needs no subsidies.
EV tax credits to up to $12,500 per vehicle -- including $4,500 for union-made vehicles, wow that's a big ole carrot, whose paying for these big carrots? US carrot supplies will be limited for most of Nissan, Honda, & Toyota that are not unionised plants as well, good. US automakers get starved to death when they try to set-up shop in Japan.

Don't want to let China totally domineer the EV raw material processing, that's a good idea. Look how being over dependant on overseas chip suppliers turned out in Q2 results for GM.
 

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So people who have to buy cheap vehicles because that's what they can afford will have to subsidize rich people buying expensive vehicles through tax subsidies.
No. A tax credit is not a subsidy, a tax credit reduces the amount of debt you owe. If you owe, say, $5,000 in taxes but buy a used EV you would get a $4,000 tax credit which would lower your taxes owed to $1,000. You do NOT get a check. A subsidy is a direct payment to an individual or corporation, like big farms get for growing corn for ethanol production or like orange grove owners get for growing oranges as a commodity.
 

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As opposed to tax breaks for the 48% of population that does not pay any Federal Income Tax.

Ha ha ha.
Ah, but 81% of us pay payroll taxes so we aren't exactly NOT paying taxes. The reason 57% (for 2021) don't pay FIT is because they fall below the cut-off after they figure their AGI, not because they're cheating (like rich people do). They don't make enough money to have to pay taxes, according to the tax code. But I digress.....this is not what this thread is about.
 

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Agreed, not a fan of incentives that disrupt the free market.
You should lobby your congressmen to put an end to the $15B Plus in annual US subsidies to Big Oil.

Plus your States share of the $5B Plus in annual State Subsidies to Big Oil.

These are direct subsidies. Which are only 8% of the total. For example Big Oil gets to write off capital expenses in 1 year. As opposed to most businesses which is 20 years.

So altogether the US subsidies Big Oil to the tune of $250B plus a year. Which dramatically reduces the cost to own an ICEv, To the tune of a ~$17k for every new ICEv sold last year. And that distorts the auto market. And $250B is a conservative estimate.
 

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Ah, but 81% of us pay payroll taxes so we aren't exactly NOT paying taxes. The reason 57% (for 2021) don't pay FIT is because they fall below the cut-off after they figure their AGI, not because they're cheating (like rich people do). They don't make enough money to have to pay taxes, according to the tax code. But I digress.....this is not what this thread is about.

Yes, the bottom half payroll taxes.

Bottom half adults don't pay anything for the the Military. Or the Federal bureaucracy.

That is not their fair share. That is cheating.
 

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So where do I apply for this check for five grand? My car is electric, it has a battery and it won't run without its battery. That makes it an EV, right?
 

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Did it get changed to applying the credit at the point of sale or is it still only when you file.
 

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In other words, a subsidy.
No. You don't get a check for $4,000. It's a credit, a reduction in the taxes you owe, not a cash payment from the Government. There's a big difference between the two. One is an incentive to lower your tax bill, the other is available only to "poor" corporate farmers or oil companies or housing developers as a CASH incentive to keep in business. Big difference.

Subsidies are much different than tax incentives; rather than reducing how much an individual or business owes, which is what a tax incentive does - hence the name "TAX incentive", subsidies directly give money to the individual or business to use as they see fit. Much like tax incentives, subsidies are a way for the government to reduce the cost of doing business. Elon Musk can get subsidies if he wanted, you and I cannot, but we can purchase something that the Government has incentivized by offering to reduce our April 15th bill, not with actual cash money, but a "wiping away" of a set sum or percentage of that debt in exchange for making that purchase that they wish to encourage. Tax incentives can be placed on items built in America to help American workers or placed on certain products to encourage growth in burgeoning markets. Subsidies are usually paid out to reduce the economic effects of fluctuating markets (i.e., the corn/ethanol industry, oil exploration and production, housing development, healthcare, commodities markets such as orange juice, pork and wheat). It's in the name, guys. Doesn't get any easier than that.
 
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