The Democrats have proposed an updated electric car incentive program at the federal level.
The program would remove the limit on the number of vehicles and replace it with a timeline, introduce a higher payout up to $12,500 and make it point-of-sale. There is also a new restriction that would put Tesla at a $4,500 disadvantage.
The current program has some flaws. The main one is that it caps the $7,500 tax credit to 200,000 electric vehicles per manufacturer.
This puts automakers who were early proponents of electric vehicles, like Tesla and GM, at a disadvantage.
The biggest issue for Tesla though is that the full rebate only applies to Union made vehicles. As of today Tesla’s employees are not part of a Union and are therefore excluded from an additional $4,500 rebate.
Here are the main changes of the latest bill:
- Remove the 200,000 vehicles per manufacturer cap
- Keep the $7,500 incentive for new electric cars for 5 years
- Make the $7,500 incentive a point-of-sale discount instead of tax credit
- EVs with battery pack smaller than 40 kWh are limited to a $4,000 incentive
- Add an additional $4,500 for EV assembled at union factories. This is the critical part that should be of interest to potential Tesla customers.
- Add another $500 for EVs using battery packs with 50% of components (including cells) are made in the US
- After the first 5 years, the $7,500 becomes only for US-made electric vehicles and it applies for another 5 years.
- They are introduce price limits on the EVs eligible for the incentives:
- Sedans under $55,000
- SUVs under $69,000
- Pickup trucks under $74,000
- Vans under $54,000
- They are also introducing caps on income to get access to the incentives, but they are fairly high at an adjusted gross income of up to $400,000 for individuals and up to $800,000 for joint filers.
As usual, these terms could change as the bill goes through the legislative process.