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March 28, 2024

For the auto industry, one of the most important provisions in the climate bill would remove the cap on how many vehicles each manufacturer can qualify for the $7,500 tax credit taxpayers receive for electric vehicle purchases. Currently, points are phased out after manufacturers sell 200,000 electric or plug-in hybrid vehicles.

Restoring credit lines would be huge for companies like Tesla and General Motors, which have already exhausted their quotas, and Ford Motor Co. and Toyota, which will soon lose their credit lines. A new tax credit introduced by 2032 will make the companies’ cars more affordable and address criticism that only the wealthy can afford electric cars.

Joe Britton, executive director of the Zero Emissions Transportation Association, whose members include Tesla and Manufacturers of charging equipment, suppliers of battery materials and other companies related to the electric vehicle business. “It’s a big deal.”

For the first time, used battery-powered vehicles are eligible for tax deductions of up to $4,000. This is important because most people buy used cars, not new ones. The average price of a new electric car has risen to more than $60,000, and while these cars offer fuel and maintenance savings, they are out of reach for many buyers.

Individuals earning more than $150,000 a year or couples earning more than $300,000 a year will not be eligible for incentives for new electric vehicles. Income limits for used car incentives are $75,000 for individuals and $150,000 for couples. These credits do not apply to sedans over $55,000 and vans, pickups and SUVs over $80,000.

“They’re trying to drive adoption among middle- and lower-class buyers, and that’s a good thing,” said Akshay Singh, a partner at PricewaterhouseCoopers, an accounting and consulting firm specializing in the auto industry. “That’s where most of the market is.”



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