Climate Bill ‘Transformative’ for Auto and Energy Industries

Climate Bill ‘Transformative’ for Auto and Energy Industries

For the auto industry, one of the most important provisions in the climate bill would eliminate the cap on how many cars from each manufacturer qualify for the $7,500 tax credit that taxpayers get when they buy electric vehicles. Currently, the credits are phased out after a manufacturer sells 200,000 electric or plug-in hybrid vehicles.

Restoring credit would be huge for Tesla and General Motors, which have used up their quotas, as well as companies like Ford Motor Company and Toyota, which will soon lose access to credit. The new tax credit, which is available until 2032, will make the companies’ vehicles more affordable and address criticism that only the rich can afford electric cars.

“A large portion of middle-class Americans will be able to get this credit that would otherwise have been blocked by the credit limit,” said Joe Burton, executive director of the Zero Emissions Transportation Association. Its members include Tesla. Manufacturers of charging equipment, suppliers of battery equipment and other companies involved in the business of electric vehicles. “That’s a big deal.”

For the first time, used battery-powered cars will be eligible for a tax break of up to $4,000. This is important because most people buy second-hand, not new cars. The average price of a new electric car has topped $60,000, putting it out of reach for many buyers despite the fuel and maintenance savings these vehicles provide.

Individuals earning more than $150,000 a year or couples earning $300,000 or more will not be eligible for incentives for new electric cars. The income limit for the used car incentive is $75,000 for individuals and $150,000 for couples. The credits will not apply to sedans that sell for more than $55,000 and vans, pickups and sport utility vehicles listed for more than $80,000.

“They are trying to get adoption among middle and lower class buyers, and that is a good thing,” said Akshay Singh, a partner at accounting and consulting firm PwC that specializes in the auto industry. “That’s where the bulk of the market is.”

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