Tesla, Ford and GM may get EV credits soon, new US law to offer big incentives2 min read . Updated: 11 Sep 2021, 12:31 PM IST
The proposed law will offer tax credit for up to $12,500 per electric vehicle, roughly converted to a little more than ₹9 lakh.
- The proposed law aims to help US President Joe Biden's vision of at least one electric car out of two on American roads by the end of this decade.
Tesla's demand for lower import duty may have split the auto industry with differing opinions in India, the electric vehicle manufacturer may get incentives in its home market soon. The US lawmakers have proposed a new legislation that will offer handsome EV credits for every Made-in-USA electric car sold in the country.
The proposed law was shared by US Democratic lawmakers on Friday. It said that electric vehicles which includes significantly higher subsidies for union-made zero emission models assembled in the United States will get an expanded tax credit.
The proposed law will offer tax credit for up to $12,500 per electric vehicle, roughly converted to a little more than ₹9 lakh. It is a sharp rise from the $7,500 incentive usually offered for most other electric cars. The bill will also not phase out tax credits even after EV makers hit sales milestone of 200,000 units. This will be hugely beneficial for Tesla, the largest electric vehicles manufacturer in the world, as well as General Motors.
The proposed EV credits, which will go on for 10 years, will also help customers to buy electric cars while reducing much of the actual cost, thanks to the generous discount. According to the proposal, individual taxpayers who have a gross income of no more than $400,000, will get the new EV tax credit. It would limit the EV credit to cars priced at no more than $55,000, while electric pickup trucks could be priced up to $74,000.
The hike, along with some other revisions, could cut the price of some of the electric cars, like GM's Chevrolet Bolt, by as much as a third. While it will not only make EVs more affordable and competitive in a market still dominated by ICE vehicles, it will also help achieve US President Joe Biden's vision of at least one electric car out of two on American roads by the end of this decade.
"We want to incentivise this. It puts American manufacturers in the lead, which is where we want them, and it reduces emissions faster than any other policy that we could put in place," Representative Dan Kildee, a Michigan Democrat, was quoted by news agency Reuters. "In a decade, we want to see American workers making good wages building American electric vehicles," he added.
The proposal could give Detroit's Big Three carmakers - Ford, General Motors and Fiat Chrysler - a big competitive edge. However, the proposed law is unlikely to get favours from foreign OEMs in US, like Honda and Toyota. Honda had issued a statement last month saying that its workers "deserve fair treatment from Congress and should not be penalised for their choice of a workplace."
The House Ways and Means Committee will vote next week on the proposal which is a part of a broad tax measure in a planned $3.5 trillion spending bill. The bill is likely to face resistance in the Senate as the Republicans have harshly criticised much of the spending bill.