Automakers say 70% of EV models don’t qualify for tax credit under Senate bill

Buyers of most electric vehicle models would not qualify for a $7,500 tax credit under a Democratic proposal in the US Senate.

That’s according to a group of major automakers.

Automakers have been privately concerned about the proposal’s requirements for vehicle batteries and critical mineral contents to be sourced from the United States.

The July 27 proposal by Senators Chuck Schumer and Joe Manchin would make 70% of electric, plug-in hybrid and fuel cell vehicles in the US ineligible once passed, according to John Bozzella, head of the Alliance for Automotive Innovation.

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Senators Joe Manchin and Chuck Schumer

Senator Joe Manchin, Democrat from West Virginia and Senate Majority Leader Chuck Schumer (D-NY). (Kent Nishimura/Los Angeles Times via Getty Images/Getty Images)

The group represents General Motors, Toyota Motor and Ford Motor, among others.

“None would qualify for the full credit when the additional sourcing requirements take effect,” he said.

Automakers want significant changes in the proposal, which is part of a broader law on drug prices, energy and taxes.

GM headquarters in Detroit

The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan on March 16, 2021. (REUTERS/Rebecca Cook/Reuters Photos)

Without the tax credit, vehicles become more expensive for American consumers.

President Biden has a goal that half of all new vehicles sold will be electric or plug-in hybrid models by 2030.

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An analysis by the Congressional Budget Office on Wednesday suggested that just 11,000 new electric vehicles would use the credit in 2023.

Photo of a Walmart charging station

Walmart and Electrify America announced that more than 120 charging stations have been added to stores in 34 states. (Walmart)

The offices of Manchin and Schumer had no immediate comment. The Senate could vote as early as Saturday on the bill.

The bill includes increasing requirements for the percentage of battery components that originate in North America based on value. After 2023, it would not allow batteries with Chinese components.

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The group would prefer to see a more gradual addition of battery component, critical ore and final assembly requirements.

Reuters contributed to this report.

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