US automakers say 70% of electric vehicle models would not qualify for tax credit under Senate bill

The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, U.S., March 16, 2021. REUTERS/Rebecca Cook

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WASHINGTON, Aug 5 (Reuters) – Most electric vehicle models would not be eligible for a $7,500 tax credit for U.S. buyers under a Democratic proposal in the U.S. Senate, a group of industry officials said on Friday. major car manufacturers.

Automakers have privately expressed concern about the proposal’s increasing requirements for vehicle batteries and critical mineral content sourced from the United States.

John Bozzella, head of the Automotive Innovation Alliance which represents General Motors (GM.N), Toyota Motor (7203.T) and Ford Motor, among others, said a July 27 proposal by Senators Chuck Schumer and Joe Manchin would return 70% of 72 ineligible US electric, plug-in hybrid and fuel cell vehicles to pass.

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“None would be eligible for full credit when additional sourcing requirements come into effect,” he said.

Automakers want significant changes to the proposal, which is part of a bigger bill of drug prices, energy and taxes.

Without the tax credit, vehicles become more expensive for US consumers, which could impact demand and sales. It could also slow progress toward President Joe Biden’s goal of having half of all new vehicles sold be electric or plug-in hybrid models by 2030.

Analysis by the Congressional Budget Office on Wednesday suggested that only 11,000 new electric vehicles would use the credit in 2023. read more

Manchin and Schumer’s offices did not immediately comment. The Senate could vote on the bill as early as Saturday.

“I don’t think we should build a mode of transport on the back of foreign supply chains,” Manchin said Tuesday.

The bill includes increasing requirements for the percentage of battery components sourced from North America based on value. After 2023, it would ban batteries with Chinese components.

“A more phased introduction of battery components, critical minerals and final assembly requirements – that better reflect today’s geopolitical, sourcing and mining realities – will preserve the credit of millions of Americans” , wrote Bozzella.

Automakers want to expand the countries from which batteries, battery components and critical minerals can be purchased to include NATO members, Japan and others.

The new electric vehicle tax credits, which would expire at the end of 2032, would be limited to trucks, vans and SUVs with a suggested retail price of no more than $80,000 and cars with a price no more than $80,000. $55,000. They would be limited to families whose adjusted gross income does not exceed $300,000 per year.

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Reporting by David Shepardson; Editing by Cynthia Osterman

Our standards: The Thomson Reuters Trust Principles.

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