The US federal government is seeking to include increased investments in electrification as part of a massive infrastructure bill.
It’s unclear how the money will be spent, but now we’re hearing that the electric car tax credit could go up to $ 10,000.
Last week, the Biden administration released an outline of its infrastructure plan, including a summary of a planned $ 174 billion investment in electrification.
As part of the summary, the administration confirmed that it plans to reform the incentive program for electric vehicles, which today consists of a tax credit of $ 7,500 on new electric vehicles up to a limit of 200,000 units per manufacturer.
However, the summary remained vague on the reform, only confirming that it will not only take the form of tax refunds but also “discounts at the point of sale“And now it will be for”American-made VE. “
In recent months and since Democrats have taken a majority position in the federal government, several new reforms have been proposed to the electric vehicle incentive program to remove the 200,000-unit-per-manufacturer limit, among other things.
Several Democrats introduced the Renewable Energy Growth and Efficiency Now (GREEN) Act to reform the program.
In short, automakers that have reached the threshold would already have access to a new $ 7,000 tax credit for an additional 400,000 EVs until a new phase-out period begins again.
A different bill has also been proposed, called the Electric Car Law, which would remove any limits on actual volume and instead introduce a 10-year period to obtain the incentive.
It would also allow buyers to apply the credit at the time of purchase rather than through a tax credit, but the latter would also be possible and for a period of five years if necessary.
The Electric Car Law appears to be closer to what was announced in the infrastructure plan summary, but it is unclear what will actually become law.
Now Wedbush analyst Dan Ives, one of the top-rated analysts tracking the EV market, says the rumor in Washington is that the new incentive will be $ 10,000. [via Yahoo Finance]:
We are hearing from our contacts on the Beltway that the $ 7,500 tax credit could potentially be $ 10,000 in credit terms and that will be a massive catalyst not only for Tesla, but for the electric vehicle ecosystem in the US as well.
If the rumor turns out to be true, it is likely to greatly accelerate sales of electric vehicles in the US.
Ives says this will be a “massive catalyst” for Tesla and others in the electric vehicle industry in the US, but I think Tesla would be by far the biggest winner here.
We should keep in mind that Tesla is now the largest seller of electric vehicles in the US, even though its buyers do not have access to the $ 7,500 tax credit, while most of the competition does.
I can’t imagine what kind of lead they could build if they not only regain access, but also get an increase in incentive to $ 10,000.
However, I have to think that the reform will also come with a limit on the sale price of electric vehicles.
It’s not something that has been much discussed lately, but it is something that has been done in many other markets where EV incentives are offered, including Canada.
A cap of $ 45,000 to $ 50,000 could make things more balanced and at the same time have a very positive impact on demand for electric vehicles in the US.
What do you think? Let us know in the comment section below.
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