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New Bill Could Revive EV Tax Credit For Tesla And GM, Include Used Cars
New Bill Could Revive EV Tax Credit For Tesla And GM, Include Used Cars-May 2024
2024-02-19 EST 22:12:27

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Once upon a time, you could snag a $7,500 federal tax credit on Teslas and electric General Motors cars. But ever since both automakers passed 200,000 EV sales in 2019 and 2020, respectively, that credit’s disappeared. It could return, however, thanks to a new bill.

Democratic leaders of the US House Ways and Means Subcommittee have backed the , introduced by Representative Mike Thompson (D-Calif.) that would make Tesla and GM’s vehicles eligible for IRS tax credits once again, and for the next several years.

Essentially, the bill would allow customers to claim up to $7,000 in credit with the purchase of a new electric car — a reduction of $500 compared to the earlier credit. That would now last up until the automaker in question surpasses 600,000 EVs sold. More critically for Tesla and GM, the law would also roll back their tallies to 200,000, meaning that any cars both companies sold after their first 200,000 would not count against their 600,000-car totals.

As with the current American Clean Energy and Security Act (ACES) Act, credits would be awarded on a sliding scale based on technology — fully-electric vehicles would receive more than plug-in hybrids, for example. Additionally, once a manufacturer does sell 600,000 qualifying cars, its future customers would only be able to claim up to $3,500 in credit for the following quarter. After that, the savings would be eliminated completely.

The proposal also makes provisions for used EV sales. Buyers would be able to save up to $2,500, so long as the car in question is two or more years old and the sale price is below $25,000. However, eligibility when buying used is tied to income, and the limit is very low, as Title IV of the states (bolded by me):

The amount which would ... be allowed as a credit under subsection (a) shall be reduced (but not below zero) by $250 for each $1,000 (or fraction thereof) by which the .

Of course, we’ve been hearing about the ever since the election, and reinstituting credits may help more of those cars hit the streets. , considering there’s evidence to suggest most people who buy EVs are wealthy enough to do so regardless of tax subsidy eligibility.

An effectively used EV credit, on the other hand, would offer the two-pronged benefit of encouraging those existing cars to stay on roads while also lowering prices for those who can’t afford new EVs — the folks who could actually use the subsidies the most. However, those income requirements could really use another look. I’d be curious to know how many individuals earning under $30,000 a year, fewer adjustments, have ever considered even used EVs.

It’s worth noting that an earlier iteration of the GREEN Act failed to pass over the summer, though with a slim Democratic majority now, there’s a better chance of it coming to fruition this time around.

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