All You Need To Know About Biden’s Proposed $12,500 EV Tax Credit

The proposal could have a major impact on US EV sales.

Since the adoption of electric vehicles is pivotal to combat the dilemma of Climate Change, it is important that these vehicles can be economically feasible for everyday Americans. The most recent proposal from President Biden’s Build Back Better Plan could help drastically decrease the upfront buying cost of EVs. Unlike the previous government-sponsored EV Tax Credit, the new rebate would automatically be deducted at the point of sale, rather than as a tax credit. 

The new plan would remove the current 200,000 vehicle manufacturer cap, which would make both automakers GM and Tesla eligible for the rebate again. The rebate starts at $7,500 and could be used towards the sale of any electric vehicle, but additional conditions could increase the rebate that a certain car is eligible for. If the car is assembled in the U.S., buyers would be eligible for an additional $2,500 in rebates. Additionally, if the car manufacturer employs unionized labor, the buyer is eligible for an additional $2,500, which would increase the maximum EV credit up to $12,500. Tesla does not employ unionized labor, thus limiting its rebate to $10,000. Some have suggested that this new proposal unfairly favors the Detroit Automakers (GM, Ford, and Stellantis NV), whose buyers would be eligible for the full $12,500. 

Due to the fact that this bill is aimed at lowering the cost of EV’s for everyday Americans, there are price caps on different vehicle types. SUVs are limited to an MSRP of $69,000, vans to an MRSP of $54,000 and pickup trucks to an MSRP of $74,000. Sedans, however, would be limited to a price cap of $55,000 –  which would exclude higher-end sedans like the Tesla Model S and the Lucid Air among others. The plan would increase the individual gross income amount to $400,000, opening up the platform to many Americans to claim their rebates. 

The proposal recently passed through the House, however it is currently waiting for final passage through the Senate. As it stands, the plan would allow for all EVs purchased after May 24 2021 to qualify for the base $7,500 EV rebate. However, buyers would only be eligible for the additional $5,000 in potential rebates if they take delivery after January 1 2022. All in all, this plan would undoubtedly increase the demand for electric vehicles and make them more affordable for everyday Americans.