EV customers likely won't qualify for $7.5K tax credit
Bill would require battery to be built in North America with minerals coming from continent
A tax credit of up to $7,500 could be used to defray the cost of an electric vehicle under the Inflation Reduction Act now moving toward final approval in Congress.
But the auto industry is warning that the vast majority of EV purchases won't qualify for a tax credit that large.
That's mainly because of the bill's requirement that, to qualify for the credit, an electric vehicle must contain a battery built in North America with minerals mined or recycled on the continent.
And those rules become more stringent over time — to the point where, in a few years, it's possible that no EVs would qualify for the tax credit, said John Bozzella, CEO of the Alliance of Automotive Innovation, a key industry trade group. As of now, the alliance estimates that about 50 of the 72 electric, hydrogen or plug-in hybrid models that are sold in the United States wouldn't meet the requirements.
“The $7,500 credit might exist on paper,” Bozzella said in a statement, “but no vehicles will qualify for this purchase over the next few years.”
The idea behind the requirement is to incentivize domestic manufacturing and mining, build a robust battery supply chain in North America and lessen the industry's dependence on overseas supply chains that could be subject to disruptions.
Production of lithium and other minerals that are used to produce EV batteries is now dominated by
China. The world's leading producer of cobalt, another component of the EV batteries, is the Democratic Republic of Congo.
Though electric vehicles are part of a global effort to reduce greenhouse gas emissions, they require metallic elements known as rare earths, found in places like Myanmar, where an Associated Press investigation has found that the push for green energy has led to environmental destruction.
Under the $740 billion economic package, which passed the Senate over the weekend and is nearing approval in the House, the tax credits would take effect next year. For an EV buyer to qualify for the full credit, 40% of the metals used in a vehicle's battery must come from North America. By 2027, that required threshold would reach 80%.
If the metals requirement isn't met, the automaker and its buyers would be eligible for half the tax credit, $3,750.
A separate rule would require that half the batteries' value must be manufactured or assembled in the North America. If not, the rest of the tax credit would be lost. Those requirements also grow stricter each year, eventually reaching 100% in 2029. Still another rule would require that the EV itself be manufactured in North America, thereby excluding from the tax credit any vehicles made overseas.
Automakers generally don't release where their components come from or how much they cost. But it's likely that some versions of Tesla's Model Y SUV and Model 3 car, the Chevrolet Bolt car and SUV and the Ford Mustang Mach E would be eligible for at least part of the credit. All those vehicles are assembled in North America.
The tax credit would be available only to couples with incomes of $300,000 or less or single people with income of $150,000 or less. Any trucks or SUVs with sticker prices higher than $80,000 or cars higher than $55,000 wouldn't be eligible.
There's also a new $4,000 credit for buyers of used EVs, a provision that could help modest-income households go electric.
The industry said the North American battery supply chain is too small right now to meet the battery component requirements. It has proposed that the measure expand the list of countries whose battery materials would be eligible for the tax credit to nations that maintain defense agreements with the United States, including NATO members.
One component of the bill would require that after 2024, no vehicle would be eligible for the tax credit if its battery components came from China. Most vehicles now have some parts sourced in China, the alliance said.
Sen. Debbie Stabenow, a Michigan Democrat and a leading ally of Detroit automakers, complained that Sen. Joe Manchin of West Virginia, a critical Democratic vote, had opposed any tax credits for EV purchases.
“I went round-and-round with Sen. Manchin, who frankly didn't support any credit of any kind, so this is a compromise,” Stabenow told reporters Monday. “We'll work through it and make this as good as we can for our automakers.”
Chipotle to pay 13,000 NYC workers $20M
Newport Beach-based Chipotle Mexican Grill will pay $20 million to current and former workers at its New York City restaurants for violating city labor laws, Mayor Eric Adams announced Tuesday.
According to investigators, Chipotle's violations of the city's Fair Workweek law, including failing to post work schedules 14 days in advance, pay a premium for schedule changes and offer available shifts to current employees before hiring new employees.
The settlement between the city and the fast-food chain covers about 13,000 employees who worked at the chain's New York City outlets between 2017 and this year. It is the result of an investigation by the city's Department of Consumer and Worker Protection into complaints filed by 160 Chipotle workers and Local 32BJ of the Service Employees International Union, city officials said.
Under the agreement, any hourly New York City Chipotle worker is eligible to receive $50 for each week worked between Nov. 26,
2017, and April 30, 2022. Chipotle also will pay $1 million in civil penalties to the city.
Walmart eyes streaming With Paramount, Disney
Walmart has held discussions with major media companies about including streaming entertainment in its membership service, according to three people with knowledge of the conversations, part of an effort to extend its relationship with customers beyond its brick-andmortar stores.
In recent weeks, executives from Paramount, Disney and Comcast have spoken with Walmart, the sources said, as the retailer ponders which movies and TV shows would add the most value to its membership bundle, called Walmart+. The trio spoke on the condition of anonymity because the discussions were private.
It is unclear whether any of the streaming companies are inclined to reach a deal with Walmart. Disney operates the Disney+, ESPN+ and Hulu streaming services; Comcast owns the Peacock streaming service; and Paramount runs the Paramount+ and Showtime services.
A Walmart+ membership, which costs $12.95 per month, includes free shipping on orders and discounts on fuel. It also includes a free six-month subscription to the Spotify Premium music service.
A Walmart spokesman declined to comment.
Weak tech earnings drag markets down
Stocks on Wall Street extended their recent run of losses Tuesday as investors reviewed disappointing earnings reports and looked ahead to the release of an inflation snapshot closely watched by the Federal Reserve.
Technology companies and retailers were the biggest drags on the market, outweighing gains in energy, financials and elsewhere. Bond yields rose broadly.
The S&P 500 fell 17.59 points to 4,122.47. The Dow slipped 58.13 points to close at 32,774.41. The Nasdaq dropped 150.53 points to 12,493.93. The Russell 2000 ended down 28.31 points at 1,912.89.
Chipmaker Micron Technology fell 3.7% after warning investors that revenue could fall short of forecasts because of weakening demand. That warning hit other chipmakers hard, with Nvidia shedding 4%.
Norwegian Cruise Line plunged 10.6% for the biggest drop in the S&P 500 after reporting disappointing financial results and giving investors a weak revenue forecast. The weak results weighed down travel-related stocks. Expedia fell 1.6% and American Airlines fell 2.7%.
As the earnings season winds down, Disney, Wendy's and Wynn Resorts will be reporting quarterly results this week.
Also Tuesday, audience rating company Nielsen surged 21.2% after it announced progress on a deal to be acquired by private equity firms.
Bond yields rose. The yield on the 10-year Treasury rose to 2.79% from 2.75% late Monday.