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Discussion Starter · #1 ·
U.S. Congress office sees few tax breaks for EVs under Democratic plan
BY Reuters
— 7:02 PM ET 08/03/2022




By David Shepardson and Joseph White
(Reuters) - A proposal by U.S. Senate Democrats to put income, price and domestic content conditions on electric vehicle tax breaks could initially sharply curtail the number of EVs that qualify, the Congressional Budget Office said on Wednesday.
The CBO estimate said the electric vehicle tax credits in a $430 billion climate and energy bill would cost taxpayers only $85 million in 2023, the equivalent of about 11,000 vehicles if all received $7,500 credits.

Automakers and their home states including Michigan are lobbying Senator Joe Manchin to revise proposals that would curtail or eliminate tax subsidies for electric trucks that cost more than $80,000, make households that earn more than $300,000 a year ineligible and tie tax breaks to ambitious and escalating levels of North American battery mineral production and manufacturing.
The proposed domestic content rules are aimed at pushing the EV industry away from reliance on China, and spur North American and U.S. battery mineral and manufacturing investments. The income limits address concerns that current law is a subsidy for the wealthy.

Privately, automaker executives said the measure could hinder EV sales in the short-term. They said they could quickly lose access to tens of thousands of credits that an existing law makes available with few restrictions on the first 200,000 vehicles sold before it phases out. They said this would hit automakers in the bottom line.

So far, Manchin has refused to reconsider his proposals.

"I don't believe that we should be building a transportation mode on the backs of foreign supply chains,." Manchin said on Tuesday.
The subsidy rules, buried in details of the Senate Democrats' climate and energy plan agreed by Manchin and Senate Majority Leader Chuck Schumer, complicate what had been a straigthforward tax credit available to buyers most of EVs -- though both General Motors (GM) and Tesla previously hit the existing 200,000-vehicle tax break cap and are no longer eligible.
Industry officials said it will be nearly impossible to achieve the domestic content rules calling for 50% of battery components to be manufactured in North America before 2024 and 60% by 2024-2025.

For 2022 to 2026, the CBO estimates the government would spend $1.78 billion on subsidies for new EV purchases - suggesting budget scorekeepers expect a total of just 237,000 EVs will qualify in those five years.

GM alone has said it expects to sell 400,000 EVs by the end of 2023. U.S. EV market leader Tesla, Ford Motor Co (F), Volkswagen AG, Hyundai, Kia and Mercedes-Benz among others have plans to sell EVs in high volume as well.

Auto dealers are worried they "will be left trying to explain to consumers why these incentives aren't available to them," Cody Lusk, president of the American International Automobile Dealers Association said Wednesday.

The Manchin-Schumer proposal would also create a new $4,000 tax credit for used EVs. The CBO estimates that would cost the government $1.35 billion over 10 years. It would translate to tax breaks for buyers of about 337,500 used EVs over that time.

Democrats are divided over the proposals, even as Republican lawmakers are closing ranks in opposition.
Senator Tina Smith, a Democrat, said Wednesday the domestic content goals "are aggressive. But we need to be aggressive ... about building out that domestic clean energy capacity here in the United States." Smith said automakers "should not expect or anticipate that we're going to reopen this bill in any significant way to make changes to it."
Michigan Democratic Senator Debbie Stabenow said she is still pushing to change the proposals.
"It's a very cumbersome, unworkable credit once the full restrictions set in," Stabenow told Reuters. "There's conversations going on."

(Reporting by David Shepardson, Joseph White and Nichola Groom; Editing by David Gregorio)
 

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TLDR: Yeah, the requirements to qualify for the credit basically mean that nobody gets them, which is exactly how EXXON-Mobil wants it.
 

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TLDR: Yeah, the requirements to qualify for the credit basically mean that nobody gets them, which is exactly how EXXON-Mobil wants it.
Mancin, senator from Fossilvania, has seen to that.

And looking at Plugshare I count only four public chargers in the entire state, two at 5-6 kW and two at 24kW. If you drive an EV you are not welcome in WV.

While other states are using VW penalty money to install fast chargers, WV is either passing up the money or misusing it for other things.

(WV is the opposite of VW)
 

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Discussion Starter · #5 ·
Now that the CBO has weighed in, the battery content requirements will likely be amended to allow for a more gradual phase-in in the final version of this bill. I doubt the income limits will change. Ultimately, BMW may have to move production of EVs to the US, if it wants to benefit from the text credits.
 

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Just stupid for America to dump the EV tax credit at this point, which is what this new law does. They should of created a sunsetting time frame instead, like 2030 no more credits, or reduce them yearly until then.
I think that you're coming from a place where you still believe that the United States is a democracy?

It's been an oligarchy for quite a while now.
 

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Discussion Starter · #7 ·
I haven't given up on democracy yet. Congress has been horse-trading since its inception. There will be horse trades in this bill too, including the EV provisions. I would expect the price limits to be retained, but I could see BMW switching to a subscription model for things like drivers' assistance and parking assistance, heated seats, etc. to allow it to come in under the wire for at least some of its EVs. BMW already knows how to do this.
 

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Now that the CBO has weighed in, the battery content requirements will likely be amended to allow for a more gradual phase-in in the final version of this bill. I doubt the income limits will change. Ultimately, BMW may have to move production of EVs to the US, if it wants to benefit from the text credits.
BMW could move the iX here because they have a line that supports all the "X" vehicles. 3/4 series production isn't coming here to the US.

They have tooled Mexico for the M2 and North America 3 series LCI.

Waiting for my M50......
 
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BMW could move the iX here because they have a line that supports all the "X" vehicles. 3/4 series production isn't coming here to the US.

They have tooled Mexico for the M2 and North America 3 series LCI.

Waiting for my M50......
Wouldn’t the i4 be possible in Mexico? Doesn’t that meet the provision?
 
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I haven't given up on democracy yet. Congress has been horse-trading since its inception. There will be horse trades in this bill too, including the EV provisions.
Absolutely, congress has always engaged in horse trading. The difference is those compromises used to be between competing states’ interests, and now the trading is between competing lobbyists’ / corporations’ interests.
Essentially nothing in this bill is written to help the maximum number of people afford the switch to BEVs.
 

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Mancin, senator from Fossilvania, has seen to that.

And looking at Plugshare I count only four public chargers in the entire state, two at 5-6 kW and two at 24kW. If you drive an EV you are not welcome in WV.

While other states are using VW penalty money to install fast chargers, WV is either passing up the money or misusing it for other things.

(WV is the opposite of VW)
I am surprised that Manchin did not weasel in some text disqualifying buyers in states where the electrical generation makeup doesn’t include a minimum percentage of coal.
For the coal miners, of course. Not because it would personally benefit himself or his coal baron family.
 

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I am surprised that Manchin did not weasel in some text disqualifying buyers in states where the electrical generation makeup doesn’t include a minimum percentage of coal.
For the coal miners, of course. Not because it would personally benefit himself or his coal baron family.
He didn't weasel out of a major increase in coal taxes that will hit his state hard. Maybe he doesn't want to get re-elected, I dunno.
 
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That quote about transport built on foreign supply chains is so disingenuous. Any "american" built car has tons of foreign parts in it. And every major carmaker has factories all over the place. Manchin knows all this so he'a just lying through his teeth. He just wants to kill the EV tax credit.
 

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Sounds like those 2023 i4 deliveries are in the clear as long as you sign a binding agreement before Biden signs the law. I would call my dealer.

 

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Wouldn’t the i4 be possible in Mexico? Doesn’t that meet the provision?
Yes... the assembly has to be done in North America. So Mexico and Canada are included. The battery materials will still need to comply with the new law to get the full 7500 so it could be that North America assembled cars only get you $3750 if the battery minerals are mined from a non qualifying country.
 

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Sounds like those 2023 i4 deliveries are in the clear as long as you sign a binding agreement before Biden signs the law. I would call my dealer.

From what I understand the income limits kick in on Jan 1, 2023 even for existing orders. That kicks me out of the possibility of tax credit.

It's all too complex and they did it this way to eliminate as many people as possible from getting that credit.

Waiting for my M50......
 

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It's all too complex and they did it this way to eliminate as many people as possible from getting that credit.
Amen. I've been saying this for a week.
 
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Yes... the assembly has to be done in North America. So Mexico and Canada are included. The battery materials will still need to comply with the new law to get the full 7500 so it could be that North America assembled cars only get you $3750 if the battery minerals are mined from a non qualifying country.
But it also has to be below the $55k price cap for sedans. The i4 edrive35 could qualify.
 
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