The New Union-Focused EV Tax Credit Bonus & American-Made Tax Credit Cut Proposed In The House Is Stupid

TruckElectric

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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).




https://waysandmeans.house.gov/site...ans.house.gov/files/documents/SUBFGHJ_xml.pdf

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.



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.


https://cleantechnica.com/2021/09/1...x-credit-cut-proposed-in-the-house-is-stupid/
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Ogre

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I hadn‘t realized Toyota and Honda would be hit by this too. Truly is a gift to GM, Ford, and Stellantis (Dodge/Ram).

I still think Tesla is going to be the big winner here as they rake in 5-10 times more EV sales than anyone else. Lowering the entry price by $7,500 is only going to make this happen faster. By the time Ford, GM, and Stellantis scale up their EV efforts Tesla is going to be 3-5 times bigger than it is now.

Ford and GM are in this weird catch 22 where there will be a big incentive for them to produce EVs but they wont be able to profit from them for a long time. They will go bankrupt try ing to keep up with Tesla’s production speed and bankrupt if they don’t convert over to EVs.


The big question is: How long are people going to keep buying ICE once they no longer have a cost advantage over EVs ? Because this will erase that cost difference overnight.
 

jerhenderson

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Ironic to have higher rebates at a union factory when the White House and state governments since Reagan have actively tried to cripple or eliminate unions.
 


Red61224

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“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."


Bringing home the bacon and punish the smart kid in class, it's what they call "unity" by bringing down the high overachiever and pull up the low dunce so it's just lukewarm output.
"Redistribution" all wrapped up with a bow. Participation trophies for everyone.

Wonder how long it will take Tesla to buy more of the abandoned legacy assembly plants off the auction block and convert them into making something useful?
 
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Ogre

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A couple things.

As @Crissa pointed out in the other thread, this is the house bill, the senate bill is the one with the $2500 “Union” benefit. The final version will likely fall in the middle somewhere.

This doesn’t just hit Tesla, Toyota, Honda, and I believe any foreign made car will be impacted. This means the Mexico made Mustang would not qualify. This is a bit of an assumption on my part because I couldn’t chase down the specifics of what “Domestic Assembly Qualification” meant exactly
 but I would the word ‘Domestic’ implies Made in the US even if they extend it to meant in the US union plants.

Tesla produces cars with a 7,500 disadvantage right now and is crushing it.

Tesla is set to receive more than $5 billion in government help next year and for every 10 years following with this measure if production rates are flat. With current capacity increases they have, they can likely increase capacity to 3m vehicles per year. Thats with just Fremont and Texas. That would be $22.5 billion per year in government help. That is without any additional factories other than finishing and ramping Texas. It’s likely by the time this measure expires Tesla will have capacity to produce 10m cars a year for $75 billion per year in handouts.

This measure is insanely good for Tesla regardless of what handouts they give to Unions.
 

Tinker71

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Nailed it.
It is natural to try to help those that have helped you. Both sides do it. The democrat's had to at least suggest it. If they care about the environment they may drop or lower the requirement to get it past, but at least "they tried" It is like guns and abortions' for Republicans. Half of them don't care, but it keeps millions of voters on their side for stuff they really want like deregulation and lower taxes for the wealthy.

What is worse is the ramp up of FUD (Fear Uncertainty and Doubt) by the big 3 and unions. They should be scared, their way of live is going to change. Their pensions are largely financed on the future success of the company. The company is about to get crushed.

They are so scared, they will probably lobby against any EV incentive. This is going to get ugly.
 

Crissa

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We need the Union votes to get this passed. If we have to give them cookies, so be it.

If this gets Tesla a weak Union that can shield Tesla from these bad managers they've had to pay out for... It would be more than worth it.

Either way, the House bill has to over-promise to get scaled back in the reconciliation version as the House negotiates with the Senate. I didn't hear anything about the 3-wheel or 2-wheel tiers, which we need. This 'must have four wheels' thing is BS.

We should look at the good things: This will encourage adoption of EVs. We'll get it at point of purchase.

And vanishingly few EVs will qualify for the union-made bonus so Unions won't have a reason to stand in the way of EVs.

-Crissa
 


Tinker71

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We need the Union votes to get this passed. If we have to give them cookies, so be it.

If this gets Tesla a weak Union that can shield Tesla from these bad managers they've had to pay out for... It would be more than worth it.

Either way, the House bill has to over-promise to get scaled back in the reconciliation version as the House negotiates with the Senate. I didn't hear anything about the 3-wheel or 2-wheel tiers, which we need. This 'must have four wheels' thing is BS.

We should look at the good things: This will encourage adoption of EVs. We'll get it at point of purchase.

And vanishingly few EVs will qualify for the union-made bonus so Unions won't have a reason to stand in the way of EVs.

-Crissa
Crissa you are so pragmatic. If we fight the union clause they may flip and fight EV and electrification all together. I see the light. I will quit whining about the unions.

As others have said, Tesla has more than a $4500 advantage anyway.

Anything that displaces an ICE mile should get something.
 

Tinker71

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In all this is there a limit for the number credits a person (Married filing jointly) can claim? I would like to get a Y for my wife's primary and then still be able to claim the credit for my CT in 2024.

Also I slightly annoyed that Tesla keeps raising the price of the Y to compensate for the anticipated EV credit and people back claiming.
 

jerhenderson

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In all this is there a limit for the number credits a person (Married filing jointly) can claim? I would like to get a Y for my wife's primary and then still be able to claim the credit for my CT in 2024.

Also I slightly annoyed that Tesla keeps raising the price of the Y to compensate for the anticipated EV credit and people back claiming.
prices are rising due to supply constraints.
 

myrickma

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In all this is there a limit for the number credits a person (Married filing jointly) can claim? I would like to get a Y for my wife's primary and then still be able to claim the credit for my CT in 2024.

Also I slightly annoyed that Tesla keeps raising the price of the Y to compensate for the anticipated EV credit and people back claiming.
I don't think it's per family, just per vehicle but I could be wrong.

Demand, not Tax Credit increasing prices. TSLA ran out of credit a long time ago and demand increases every day despite it.

Musk needs to take some of the money he's getting from his recent stock selloff and build another Gigafactory. Don't know how much he'll have leftover after taxes and exercising options but I'm sure it's enough to break ground somewhere if not fully funded. I'm sure Tulsa OK (was between Tulsa and Austin for Giga-Texas) would be happy to clear some red tape to buy and build quickly.
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