A newly proposed Senate deal would extend the consumer tax credit for many electric vehicles sold in the US, including used cars. As reported Wednesday by Bloomberg, if the bill passes, buyers could get a tax credit for purchasing electric vehicles even from automakers currently excluded from the existing deal, like GM, Tesla and Toyota.
The tax credit would allow automakers to offer $7,500 back to customers, and buyers of used vehicles could get back $4,000. However, there are multiple conditions that must be fulfilled.
The critical minerals used to construct the battery must be mostly extracted or processed in a country that has a free trade agreement with the US, or recycled in North America. Before Jan. 1, 2024, that means at least 40%, and it rises 10 percentage points every year until reaching 80% in 2027.
The components of the battery must also be constructed or assembled in North America at a rate of 50% in 2024, and 10 percentage points more every year until hitting 100% in 2029.
There's also a price cap of $55,000 for new cars and $80,000 for pickup trucks, vans and SUVs. Add to that an income cap of who can claim the tax credit: $150,000 if you're single, or $300,000 if you joint-file tax returns.
On the plus side, It removes the 200,000-vehicle cap on automakers, which previouslymodels from getting the tax credit.
The new tax credit is being included as part of the Inflation Reduction Act of 2022. Senate Majority Leader Chuck Schumer, a Democrat from New York, reached a deal with Sen. Joe Manchin, a Democrat from West Virginia, who now says he'll support the bill, likely giving Democrats the majority needed for it to pass without any Republican support. Just this month, Manchin said he wouldn't support such legislation. Schumer called the deal "big news" late Wednesday.
"The Inflation Reduction Act of 2022 will put the US on a path to roughly 40% emissions reductions by 2030," Schumer tweeted.
Neither GM, Tesla nor Toyota immediately responded to requests for comment. The Senate has yet to vote on the bill.