US automakers say 70% of EV models would not qualify for tax credit under Senate bill

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

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WASHINGTON, Aug 5 (Reuters) – Most electric vehicle models would not be eligible for a $7,500 tax credit for American buyers under a Democratic proposal in the U.S. Senate, a group of major automakers said on Friday. cars.

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

John Bozzella, head of the Alliance for Automotive Innovation that represents General Motors (GM.N), Toyota Motor (7203.T) and Ford Motor, among others, said a July 27 proposal by Senators Chuck Schumer and Joe Manchin would generate 70% of 72 electric, plug-in hybrid and fuel cell vehicles in the US are not eligible to pass.

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“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.

Without the tax credit, vehicles become more expensive for American consumers and this could affect demand and sales. It could also set back progress toward President Joe Biden’s goal of having half of all new vehicles sold be electric or plug-in hybrid models by 2030.

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

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

“I don’t think we should build a mode of transportation on the basis of foreign supply chains,” Manchin said Tuesday.

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.

“A more gradual phase-in of battery component, critical ore, and final assembly requirements, which better reflect current geopolitical, sourcing, and mineral extraction realities, will preserve credit for millions of Americans,” Bozzella wrote.

Automakers want to expand the countries from which batteries, battery components and critical minerals can be sourced to include NATO members, Japan and others.

The new tax credits for electric vehicles, due to expire at the end of 2032, would be limited to pickups, trucks and SUVs with suggested retail prices of no more than $80,000 and cars priced no more than $55,000. They would be limited to families with adjusted gross income of up to $300,000 annually.

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Information from David Shepardson; Edited by Cynthia Osterman

Our standards: the Thomson Reuters Trust Principles.

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