EV tax credits in Biden’s Build Back Better Act will help sell more cars than new chargers in infrastructure bill

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  • Now that President Joe Biden’s $1 trillion infrastructure bill is in law, Democrats are turning their eyes to his Build Back Better Act to advance the administration’s electric vehicle agenda.
  • Officials see the tax incentive of up to $12,500 per vehicle in the new bill as a much-needed second step to drive adoption of electric vehicles.
  • There is $7.5 billion for EV chargers under the bipartisan Infrastructure and Jobs Act. But only 15% of Alixparts’ forecast of $50 billion will be needed to reach Biden’s goal.

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DETROIT — Now that President Joe Biden’s $1 trillion infrastructure bill is in law, Democrats are turning their eyes to his Build Back Better Act to advance the administration’s electric vehicle agenda.

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The bipartisan Infrastructure Investment and Jobs Act provides $7.5 billion to jumpstart Biden’s goal of having 500,000 EV fees nationwide by 2030. The $1.75 trillion Build Back Better Act, which is close to a vote in the US House, includes tax incentives of up to $12,500 per vehicle to boost consumer demand for electric vehicles.

Debbie Stabeno (D-Mich.) said during an event to celebrate GMC Hummer EV production with Biden in Detroit, “The infrastructure bill signed by the president this week is an important step in investing in our future. ” “Now we are focused on the next step.”

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General Motor’s Factory Zero incident was largely a parade of Michigan Democrats bragging about Build Back Better and using upcoming Hummer production as a soapbox to tout union-built vehicles.

Biden said during the event, “With my Build Back Better Plan this infrastructure law, we’re going to kickstart the production and recycling of new batteries, materials and parts, building clean vehicles with new loans and new tax credits.” promoting it.” “Creating new purchasing incentives for consumers to purchase American-made, union-made clean vehicles like the electric Hummer.”

The $1.75 trillion Build Back Better bill is set to vote in the House on Friday.

controversial incentives

EV incentives proposed under Build Back Better include the current $7,500 tax credit for purchasing a plug-in electric vehicle, as well as $500 if the vehicle’s battery is made in the U.S. It also includes a controversial $4,500 tax credit if The vehicle is assembled domestically by Union Labor, which has drawn heavy criticism from non-Detroit automakers whose US workers are not organized.

Toyota Motor has called the federally-created incentives “clearly biased” and “incorrect”. Tesla CEO Elon Musk has also heavily criticized Biden for his encouragement and support for unions such as the United Auto Workers union that represents plant workers at Detroit automakers.

Tax credits supporting advanced technologies that generally benefit wealthy Americans have always been controversial, but stipulating that a portion of the $12,500 go to federally-made EVs raised partisan tensions. Biden has been unapologetic about his support of the unions.

“We have to focus on what made the country 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 must report adjusted gross income of $250,000 or $500,000 for joint filers to receive the new EV tax credit. It would limit the EV credit to cars priced over $55,000 and trucks and SUVs up to $80,000.

‘More important bill’

BofA Global Research analyst John Murphy described the infrastructure package as “only marginally supportive” of the auto industry’s move toward EVs. He added that $12,500 in tax credits for buying EVs is more important to increase adoption.

“As noted, the Biden administration’s Build Back Better agenda is the more important bill determining regulatory support for the electrification revolution in America,” Murphy wrote in an investor note last week.

Transportation officials touted Build Back Better last week as a key part of Biden’s plan with a new infrastructure package to help him achieve the president’s EV sales target. He wants half of all new vehicles sold by 2030 to be electric vehicles, including plug-in hybrid electric vehicles with EV batteries and conventional internal combustion engines.

Goldman Sachs analyst Mark Delaney believes such incentives for EVs could make the overall cost of buying a vehicle “more compelling and broadly benefited”, allowing automakers to make their products more accessible to consumers. Can be made economical.

‘ambitious’ goals

The infrastructure package, meanwhile, actually covers a portion of the money needed to build a nationwide charging network.

The $7.5 billion is only 15% of the $50 billion consulting firm AlixPartners estimates will be needed to reach Biden’s goal of a nationwide network of 500,000 chargers by 2030.

Experts say that the building which will attract a multitude of public and private sector investments. He describes the infrastructure package as a positive step in the right direction.

“It’s certainly not going to come from the government,” said Mark Wakefield, global co-leader of automotive and industrial practice at AlixPartners. “It’s probably going to come more than just utilities, automakers, charging companies, convenience stores, companies putting chargers in gas stations … the fact that there’s any investment is a good thing.”

Before Biden signed off on the infrastructure package, US Transportation Deputy Secretary Polly Trottenberg said the 500,000 Charger target is “ambitious.”

“We stand by our goal. Our goal is to get to 500,000 EV chargers by 2030. It’s clearly going to be strong partnerships at the state and local level and with private providers as well,” she told reporters during a call last week. Said to. “It’s an ambitious goal, but I think we don’t have any plans to get there, as well as working with our partners at the Department of Energy.”

According to Christopher Koss, principal deputy assistant secretary in the office of the assistant secretary of transportation policy, the DOT and DOE have set up a joint program office under the infrastructure bill on how to use the money.

DoT officials declined to estimate how many EV chargers they plan to install, with $7.5 billion under the infrastructure bill. According to AlixPartners, the cost of devices to install Level 3 “fast chargers” can range from $120,00 to $260,000, depending on charging speed.

“The goal of our program is to figure out how do we create a market? How to make sure we’re investing in places that private sector investors aren’t going to in the first place,” he cited inner cities. Giving said, multifunctional location and along interstate highways.

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