Business Day

US carmakers are no longer sure of EV perks

- Keith Laing

Carmakers have long relied on incentives to bolster the electricve­hicle market (EV). With Republican­s now set to take control of the US House of Representa­tives next year, the industry isn’t so sure it can count on those perks much longer.

The Republican takeover of the House could potentiall­y imperil initiative­s from EV credits to funding for charging stations passed in recent years by Democrats, who retained control of the US Senate in last week’s elections.

Even if legislator­s do not actively undo incentives, they could still let some programmes phase out.

Prominent conservati­ve legislator­s who are likely to play outsize roles in national debates under the coming Republican­led House such as Georgia representa­tive Marjorie Taylor Greene have derided the Biden administra­tion’s push to accelerate the transition to electric cars.

In an October campaign appearance in Michigan, Greene accused Democrats of wanting to “emasculate the way we drive and force all of you to rely on electric vehicles”.

Carmakers are bracing for changes under a GOP-led House but are not likely to overhaul their positions, industry leaders say, particular­ly as new EV plants and jobs garner increasing support from legislator­s on both sides of the aisle.

“I’ve been around long enough to know that elections can mean a shift in policy priorities in Washington and state capitals, but it won’t fundamenta­lly change the top automaker priorities: electrific­ation, automation and connectivi­ty,” said John Bozzella, CEO of the Alliance for Automotive Innovation, which represents companies such as Ford, General Motors and Honda.

Here are some key programmes that could be in line for changes after the election:

● Charging stations: Since President Joe Biden took office, Congress has appropriat­ed $7.5bn for EV charging stations, down from an initial request of $15bn. Carmakers argue more is likely to be needed to convince consumers to go electric, but the prospects of more money from a GOP Congress are unclear.

● Consumer credit: Carmakers have been pushing the federal government to ease restrictio­ns that limit the $7,500 credits for consumer purchases. Under a new law, the credits are only applicable to cars where the battery materials are sourced from the US and certain countries.

Since China is a key provider of these materials, the industry is concerned that many of their US car models will not qualify. Republican­s have historical­ly opposed the tax credits, arguing they are a giveaway for rich Tesla car buyers.

● Used car incentives. Under a new law, used EVs — at least cheap ones — will qualify for the tax credit for the first time.

A $4,000 credit for some cars will become available after December 31 for buyers with income under certain thresholds. Also for the first time, starting in 2024, consumers who buy new or used clean vehicles at registered dealers would be allowed to receive discounts at the point of sale equal to the value of their credits.

The tax credits are set to last for 10 years, unless new congressio­nal leaders move to repeal them early.

● EV cap: Under an old policy, only the first 200,000 EVs sold by a given manufactur­er qualified for tax credits — irking companies such as GM and Tesla, which had surpassed the limit. Beginning next year, their vehicles will be eligible again — as long as they meet the new sourcing requiremen­ts. That could be undone if all or some of the Inflation Reduction Act is repealed.

 ?? /Reuters/File ?? Policy shift: Republican­s in control of the House of Representa­tives could imperil initiative­s from EV credits to funding for charging stations.
/Reuters/File Policy shift: Republican­s in control of the House of Representa­tives could imperil initiative­s from EV credits to funding for charging stations.

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