First, a word on how legislation is made in the USA, in the simplest effective way I can formulate it right now: If a bill is going to be passed into law, most members of the House of Representatives, most members of the Senate, and the President of the United States need to all agree on what’s in it. Because doing so requires compromise among many extremely powerful and power-hungry people with all sorts of different backgrounds and interests — including people who have strong opposing points of view on fundamental policy matters — things can get messy. Very messy. If you want to get something big passed into law, it often has to get a bit weird.
Keeping in mind the checks & balances inherent in our country’s political structure, you can’t just assume that if you have a Democratic president, he can do whatever he wants. Presidents are typically limited by a variety of factors, and what is really needed in order to have strong and lasting change is strong relationships across networks that lead to actual policy changes. A spirit of compromise is also critical.
Before legislation is actually passed, the bulk of the Senate, the bulk of the House, and the president toss around and publish their versions of what they think should be passed. Just because one of those parties publishes something (House Democrats in this case) doesn’t mean that’s what we’ll get. It doesn’t even necessarily mean that’s what they expect to get.
Understanding that, let’s get to the EV tax credit. He are 4 key points:
- The EV tax credit we have had for years in the USA provides up to $7,500 for people who buy a new electric vehicle. There’s a per-automaker limit on it that triggers a subsidy phaseout after an automaker sells its 200,000th EV. That phaseout has already been triggered and completed for Tesla and GM EV buyers.
- A US Senate Finance Committee wishlist published earlier this year proposed that the US extend the $7,500 tax credit (including a credit renewal/extension for Tesla and GM) and add a $2,500 tax credit for American-made EVs as well as a $2,500 credit for union-built EVs.
- House Democrats have just proposed legislation that would indeed extend the $7,500 EV tax credit, but they increased the $2,500 tax credit for union-built EVs to $4,500 and cut the American-made bonus to just $500 (from $2,500).
Breaking: House Dems release new proposed changes to EV tax credit:
* $4K base credit + $3.5K for 40 kWh or larger battery 50 kWh in 2027
* US assembled = $4.5K (I think)
* MSRP caps (see image)
* Min battery: 7 kWh, then 10 kWh in 2027
* $0 starting 2027 if not assembled in US pic.twitter.com/Z6j9qIZRcj
— EVAdoption (@EVAdoptionTweet) September 11, 2021
The union-built bonus is ridiculous in my opinion. It is workers who decide whether or not to form a union, not buyers and not automakers. Reportedly, it’s not a popular idea among workers in the auto industry these days to unionize due to what is considered to have been extensive corruption in the UAW in recent decades. No one — not consumers, not non-union auto workers, and not automakers — should be punished if workers at an auto company don’t want to form a union. Buyers of a Chevrolet EV shouldn’t get a $4,500 subsidy that buyers of an American-made Tesla, Nissan, or BMW EV don’t get just because workers at Tesla, Nissan, and BMW have decided they don’t want to unionize.
When I worked at Tesla no body wanted the UAW there
— cory (@Cory__17) September 8, 2021
What would really be helpful for the USA would be if more electric car production stimulated economic activity within the country. “Union-built” doesn’t do anything special in that regard. The “American-built” provision, however, would be quite helpful for that. But House Dems decided to boost the former while cutting the latter! That makes no sense to me. It’s idiotic. I don’t know who thought these changes, in comparison to the US Senate Finance Committee’s proposals, were a good idea, but whoever those people were should be fired. These changes are counterproductive and illogical, and House Dems, as well as other Democrats who have influence on this topic, should remedy the matter as soon as possible.