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US EV tax credit for Tesla Model 3 Model Y

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Biden & Democrat Proposals Include $8,000 To $10,000 Rebate For Tesla Buyers (Instead of $0) — But Some Tesla Fans Are Upset

A few years ago, Tesla surpassed 200,000 sales in the United States. That led to the phaseout of the US federal tax credit (up to $7,500) for Tesla buyers in the US of A. GM passed the 200,000 vehicle milestone a little while later, but every other automaker can still tell their customers that if they buy one of their EVs today, they can get a $7,500 tax credit from the US government

Republicans had control of the US Congress (Senate and House) and the White House for a couple of years at just the right time to remedy this issue. They did nothing to solve this odd system that rewards the laggards and punishes the leaders. Well, there was rumor that the credit might be extended and the total eligible buyers would be increased, but there was also rumor that Donald Trump specifically killed that before it saw the light of day. (I’m curious how many of the Tesla supporters up in arms about the policy I’m about to discuss are aware of this history.) In fact, the two things Republicans spent most of their time on while in power were: 1) trying to kill the Affordable Care Act (the late Senator John McCain, a Republican himself, blocked that effort), and 2) cutting taxes enormously on the wealthiest Americans and corporations while ignoring all the warnings about what that would do to our budget and how corporations would respond (cough, stock buybacks, cough). They also claimed crazy economic growth rates that I assume no one seriously thought were close to possible in order to “justify” the tax cuts. Of course, none of their publicly proposed expectations were right, while Democratic critics seemingly had crystal balls. In any case, helpful or not, that’s all that Republicans in Congress cared to do while Trump put coal lobbyists in charge of the EPA (Environmental Protection Agency) and corrupt oil & gas guys in charge of the Department of Energy and Department of Interior.

Fast forward to 2021.

As part of broad efforts to stop global heating and incentivize cleantech, Democrats — led by Biden — decided to try to renew the EV tax credit for Tesla, GM, and any other automakers that sell more than 200,000 EVs in the USA.

Not only that, but they have significantly improved the system to make it more helpful to non-rich people. Previously, it was a $7,500 tax credit that could not carry over into the next year. That meant you had to have at least $7,500 of taxes to pay after all other deductions in order to use the full tax credit. You have to make a decent amount of money to have that much tax liability. The proposal Democrats have put out there in 2021 changes this credit to a rebate, which means that it will fully benefit any person who buys a new EV — not just the richest among us. Among other things, that makes Tesla vehicles accessible to a lot more people, something that any true Tesla fan should appreciate.

I’m well known for writing articles defending Tesla and Elon Musk to unfair and incorrect claims about them. There have been tens of millions of views on articles I’ve written that fit into that category. It’s tremendously unfortunate and sad that many people on the correct side of those narratives have gone and committed the same basic offenses regarding someone who is helping Tesla. Alas, we appear to live in upside world these days. Fake news is “real news” to many, while real news is “fake news.” Someone who tried to overthrow US democracy, install fascism, and completely corrupt & steal a democratic election (confirmed as such by multiple people he appointed) has somehow convinced tens of millions of Americans who must have failed basic reading comprehension and critical thought exams that he is the pro-democracy, anti-fascism, pro-fair elections politician who somehow had the presidency stolen right out from underneath him. (Never mind that those same people claim the winner is incompetent — apparently thinking that an incompetent person could steal an election from a supposedly brilliant president who had control of orders of  magnitude more power and was at least publicly paranoid about rigged elections since the days when he claimed the Emmys were rigged against him. Granted, claims of a rigged election were transparent lies from the months before the election when they started, just an effort to put a spin on reality that told people a certain person wasn’t a failure who suffered an epic loss. But let’s move on.)

The Democrats weren’t done modifying the EV tax credit/rebate, though.

They also added two extra bonuses to incentivize things they see as good for America. There’s a $2,500 bonus if the vehicle is American made. This benefits Tesla since Tesla produces cars and batteries in the US of A, increasing the potential EV rebate for Tesla buyers to $10,000. [Edit: Another proposal includes just $500 for the domestic production bonus. The House and Senate have to reconcile their proposals — and, of course, pass the combined bill — before sending to President Biden’s desk.]

Lastly, they added a $2,500 bonus for EVs that are built by a union workforce. [Edit: As noted above, there are slightly different proposals, with one including a $4,500 bonus here. The proposals have to be reconciled. I assume the former is more likely than the latter to go through.] There are probably multiple reasons for this, but one big one is that Biden and many other Democrats are concerned about the hollowing out of the middle class, the growing struggle of the working class, and see unions as a critical way for the working class to have or gain more negotiating power with their employers. They are aiming to lift up the working class and think this will help. Yep, key former figures at the UAW have a history of corruption, and many argue that this automotive union does more harm than good. Not everyone sees it like that, though, and many UAW members think they get better wages and benefits due to the union’s negotiating power (which only seems logical if you think about it for a moment). There’s also the very valid point that companies don’t create unions for their workers — workers have to come together and agree to start or join a union. So, this extra $2,500 bonus pushes auto workers at companies like Tesla to think more seriously about forming/joining a union.

But it’s a bit extreme — and false — to act like Tesla and its workers are being penalized by this proposal. Instead of Tesla buyers getting $0 in federal support, they will likely get $10,000, more than any prior Tesla buyers in the US. Acting like Biden is the devil for trying to incentivize something he believes will help build up the working class and improve their lives is, frankly, completely idiotic.

But what about the UAW–Biden connection?! Again, one of Biden’s core focal points in decades in US politics has been trying to help the working class. He most idolizes former presidents and members of Congress who did that the most. As part of that effort, he’s a big fan of unions, and that includes the UAW. To assume and claim it’s corruption is to act like a person who has no empathy or ability to read another person, their historical actions, or history at all. Also, yes, the UAW supported Biden, and Biden supports the UAW. Shocker. Values align and people support each other! On the flip side …

It’s funny how things work in politics, that endorsing a politician’s opponent (Kanye West in this case) leads to that politician not being super into you and not putting you on the top of his list of people to please while running the most powerful country on Earth. Everyone’s free to do what they want in politics, of course, but expecting extra special treatment from someone in power when you specifically opposed them is, well, odd (to put it as nicely as possible). … The Obama–Biden administration supported Tesla. The Trump administration did the opposite. At the moment, the Biden administration is supporting a federal tax credit that will massively benefit Tesla buyers.

As a final note: Do I think it’s smart politics to not make good friends with Elon Musk, and Tesla more openly? No, I do not. That’s evident enough from the totally misguided freakouts of countless Tesla fanatics. I think it would be smart of both sides to be positive and open in collaboration to help our country and world. Alas, it’s 2021. …

 
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Written By

Zach is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA], NIO [NIO], Xpeng [XPEV], Ford [F], ChargePoint [CHPT], Amazon [AMZN], Piedmont Lithium [PLL], Lithium Americas [LAC], Albemarle Corporation [ALB], Nouveau Monde Graphite [NMGRF], Talon Metals [TLOFF], Arclight Clean Transition Corp [ACTC], and Starbucks [SBUX]. But he does not offer (explicitly or implicitly) investment advice of any sort.

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