New Climate Bill Goes to Biden: EV Provisions Unclear

August 13, 2022

Electrek:

The House made no changes to the Senate bill, in order to avoid having to bring it to another Senate vote. If there were changes, the bill would have to go through a conference process between the two houses, and each house would have to vote again. Given how narrow the Senate vote was (51-50) and the fragility of the compromise, Democrats wanted to avoid any chance of the bill failing, so passed the bill as-is.

For EV fans, this means that the current version of the bill remains – complete with its confusing implementation of new EV tax credits. We broke that down in a post earlier this week, which you should read if you are considering buying an EV soon (we tried to include guidance for as many EVs/manufacturers as we could, so click through if you have questions about a specific automaker).

In short, EV buyers should consider signing a “binding purchase agreement” before Biden signs the bill if they want to lock in access to the “old” tax credit; that old credit will no longer be available on cars that were assembled outside North America as soon as the bill is signed. This is not as urgent of an issue for cars from manufacturers that won’t lose access to the “old” tax credit, but it’s still good to be aware of, given the battery sourcing guidelines which will be adopted later this year.

As long as a certain percentage (which raises over time) of a vehicle’s battery parts are sourced responsibly, that vehicle will qualify for credits. Guidelines about that portion of the bill will be developed by the Treasury and put into place some time before the end of this year.

One of President Biden’s priorities has been to revitalize American manufacturing, so the new EV tax credit focuses more on manufacturing than on stimulating EV demand. EV demand is very high right now (and for the foreseeable future), but manufacturing and supply have not been able to keep up with the public’s growing desire to own EVs. So a bill that targets supply, right now, should help the problem, though it will take some time to spin up the supply of minerals and batteries.

The new EV tax credit focuses mostly on onshoring EV manufacturing and diversifying supply chains to countries that the US has free trade agreements with. Currently, a large chunk of EV supply chains are concentrated in China, which the US does not have a free trade agreement with.

Unfortunately, these priorities mean that, despite many tax credit improvements (making it available upfront at the point of sale and on used vehicles, eliminating the 200k cap per manufacturer, etc), in the short term there has been a lot of confusion over which vehicles will qualify now, next week, in the coming months, and in the coming years. Hopefully things will settle down once the ink dries on the paper and the government releases a list of vehicles that qualify, but until then, we’ll try to keep you abreast of developments.

We don’t know yet exactly when Biden plans to sign this bill, but will update when we do.

2 Responses to “New Climate Bill Goes to Biden: EV Provisions Unclear”

  1. rhymeswithgoalie Says:

    While I’m delighted that the California legislature is rewarding people for not having cars, it’s less of a benefit for carless poor people who don’t pay that much in taxes anyway. (Like the Georgia lege trying to give tax credits for fetuses, which doesn’t do much for a pregnant 16-year-old.)


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