Connect with us

Hi, what are you looking for?



Senate KILLS the EV Tax Credit

Omar Qazi (@WholeMarsBlog on Twitter) has a very interesting take on the recent “Inflation Reduction Act” that is very cynical in regards to the EV tax credit. That doesn’t mean it is wrong, but it does go against my general rule of assuming people have good intentions. I’m willing to make an exception to that assumption, though, for government laws, which are known to be quite corrupt in many cases.

Editor’s note: There’s another take on why the domestic battery supply requirements for the EV tax credit in this bill are so strong. We’ll return to the topic with other perspectives as well.

I encourage you to read the whole thread about the EV tax credit on Twitter, but I’ll summarize the highlights of his theory here.

We all know Tesla and Chinese automakers have been running away with the electric vehicle market, and legacy auto has been losing ground every month. What could US Congress do to slow the progress of the EV makers, while claiming to help the environment? How could these Congresspeople repay some of their biggest donors by slowing the EV disruption and subsidizing the laggards? What if they put extreme rules on where the battery is created and where the minerals come from. These rules would be very difficult to meet for the large battery supply needed for battery electric vehicles, but relatively easy to meet for a tiny battery used in a plugin hybrid. By providing a subsidy that is easy for the laggards to use to subsidize their gas and diesel cars, they could put a small $1,000 or $2,000 battery in a car and get a big $7,500 discount. Meanwhile, the companies that build good full electric vehicles may struggle to qualify for any credit.

Some of these plugin hybrids will never even be plugged in, just purchased for the tax credit. I do think most people will figure out that they can save a ton on fueling their cars if they just plug them in. I also think this will help encourage workplaces and apartments to have more level 1 and level 2 charging. So, I don’t think all of the effects of this are bad.

Instead of making the US a leader in electric vehicles, this could cause us to make a lot more plugin hybrids, just as the rest of the world is accelerating its adoption of fully electric vehicles. Let us hope our auto industry survives this legislation and continues to transition to electric vehicles in spite of the obstacles put up by our Congress.

Another matter is that if you sell your vehicles through a dealer network, instead of having to wait till April 15th of the next year to get the tax credit, you can transfer it to a dealer who will apply it to the car sale right away. This is especially useful if you don’t make enough to pay $7,500 in income taxes, since you will then get the full credit, but the problem here is that this alternative option is only available if you transfer the subsidy to a dealer. Startups like Tesla, Rivian, and Lucid that don’t sell through a dealer network don’t have this advantage available to them.

For the last two years, auto dealers have been short of cars due to supply chain issues caused by the way governments responded to Covid-19 and shut down many businesses. Dealers have found they can make more money selling a few cars for large markups instead of selling many cars for small markups. This has given them even more money that they can use to lobby Congress. For more of the insane games the auto dealers have been playing, I highly recommend you watch some of the videos by Lucky Lopez, who lets you see behind the curtain of this world.

I am hopeful that Tesla will find a way to get some of the credits next year, but I’m fearful that Rivian, Lucid, and other startups won’t be able to do that and the unfair advantage to legacy automakers may thus cause them to fail.

Disclosure: I am a shareholder in Tesla [TSLA], BYD [BYDDY], Nio [NIO], XPeng [XPEV], and Hertz [HTZ]. But I offer no investment advice of any sort here.

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!

Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.

Former Tesla Battery Expert Leading Lyten Into New Lithium-Sulfur Battery Era — Podcast:

I don't like paywalls. You don't like paywalls. Who likes paywalls? Here at CleanTechnica, we implemented a limited paywall for a while, but it always felt wrong — and it was always tough to decide what we should put behind there. In theory, your most exclusive and best content goes behind a paywall. But then fewer people read it! We just don't like paywalls, and so we've decided to ditch ours. Unfortunately, the media business is still a tough, cut-throat business with tiny margins. It's a never-ending Olympic challenge to stay above water or even perhaps — gasp — grow. So ...
If you like what we do and want to support us, please chip in a bit monthly via PayPal or Patreon to help our team do what we do! Thank you!
Written By

I have been a software engineer for over 30 years, first developing EDI software, then developing data warehouse systems. Along the way, I've also had the chance to help start a software consulting firm and do portfolio management. In 2010, I took an interest in electric cars because gas was getting expensive. In 2015, I started reading CleanTechnica and took an interest in solar, mainly because it was a threat to my oil and gas investments. Follow me on Twitter @atj721 Tesla investor. Tesla referral code:


You May Also Like


Recent changes to federal regulations deemed certain electric vehicles no longer eligible for the full $7,500 tax credit. However, a loophole has been spotted...


Tesla’s Model 3 is its most popular sedan, and now the automaker has added a highly coveted variant of the electric vehicle back to...


Consumers have a new resource for finding plug-in electric and fuel cell vehicle tax credits. Current owners and those considering an electric vehicle purchase...


Tesla has juggled its prices once again, lowering the price of the Model 3 RWD by $1,000 and the Model Y by $2,000. It...

Copyright © 2023 CleanTechnica. The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by and do not necessarily represent the views of CleanTechnica, its owners, sponsors, affiliates, or subsidiaries.