Tesla & Other EV Makers in US Could Get Tax Credit Again Thanks to New Reform Pushed by Senate

Photo: Hamada Tatsuya

Tesla and other EV makers that are no longer eligible for tax breaks could once again get access to them thanks to new reform being pushed by the Senate. Among other things, the Inflation Reduction Act of 2022 aims to promote realistic energy and climate policies.

Tesla is the leader in the global electric vehicle market, including in the US. Having produced the largest number of electric vehicles and contributed the most to solving the problem of climate change, instead of deserved praise, the company received punishment in the form of forfeiting tax benefits for customers who buy its electric vehicles. General Motors is also deprived of tax benefits, as it has already sold more than 200,000 electric vehicles in the US market. Thus, new EV manufacturers, which are most often foreign, benefit from sales in the US, while the veterans who contributed the most face restrictions.

It seems that this injustice could finally be solved thanks to the new Inflation Reduction Act of 2022, drafted by Senator Joe Manchin of West Virginia and Senate Majority Leader Chuck Schumer. This climate, tax, and health legislation is due to the Senate next week. The legislation includes a $7,500 electric vehicle tax credit.

We must be honest about the economic reality America now faces. That's why I'm proud to support the Inflation Reduction Act of 2022, which will address record inflation by paying down our national debt, and by lowering energy & healthcare costs. MORE: https://t.co/oPZF1gilEh

— Senator Joe Manchin (@Sen_JoeManchin) July 27, 2022

A key point that Tesla and GM would benefit from in the new legislation is removing the tax credit cap after automakers have sold 200,000 electric vehicles. Among the conditions for this is that electric vehicles and most of their battery components must be assembled in North America. The batteries must also contain a certain percentage of minerals from countries that have free trade agreements with the US. Used vehicles will also receive a $4,000 tax credit. This tax credit also includes electric sedans up to $55,000, meaning the base Tesla Model 3 should be eligible.

“In addition to fighting inflation, we must stop pretending that there is only one way to combat global climate change or achieve American energy independence. The Inflation Reduction Act of 2022 addresses our nation's energy and climate crisis by adopting commonsense solutions through strategic and historic investments that allow us to decarbonize while ensuring American energy is affordable, reliable, clean and secure.

“This legislation ensures that the market will take the lead, rather than aspirational political agendas or unrealistic goals, in the energy transition that has been ongoing in our country. The Inflation Reduction Act of 2022 invests in the technologies needed for all fuel types – from hydrogen, nuclear, renewables, fossil fuels and energy storage – to be produced and used in the cleanest way possible. It is truly all of the above, which means this bill does not arbitrarily shut off our abundant fossil fuels. It invests heavily in technologies to help us reduce our domestic methane and carbon emissions and also helps decarbonize around the world as we displace dirtier products.”

© 2022, Eva Fox | Tesmanian. All rights reserved.

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