Senate Deal Includes EV Tax Credits Wanted by Tesla, Toyota

WASHINGTON — A breakthrough agreement between U.S. Senator Chuck Schumer and Joe Manchin includes the extension of a popular consumer tax credit for the purchase of electric vehicles, according to those familiar with the case, a big win for EV makers such as General engines, Tesla Inc. and Toyota Motor Corp.

The credit will be included in a broader legislative package that will revitalize key parts of President Joe Biden’s domestic political agenda and include approximately $369 billion in climate and energy spending.

EV supporters have argued that the tax cuts are needed to boost the development of the emerging plug-in car market, which is seen as crucial to reducing fossil fuel use and achieving Biden’s ambitious climate goals. If passed, the package would help supplement existing tax credits that have already been exhausted for some automakers.

The two senators have taken very different stances on the viability of electric cars. Schumer has called for all cars produced in America to be electric by 2030, while Manchin called the idea that the federal government would subsidize electric cars “ridiculous.”

The most important details have yet to be looked at. In recent months, Manchin had pushed for stricter limits on the cost of eligible vehicles and stricter limits on the income of those allowed to take advantage of the credit.

A previous proposal from the Biden administration allowed automakers to offer an additional $4,500 to EV buyers, but the provision was opposed by Manchin after strong backlash from companies such as Tesla and Toyota, who claimed it would have given an unfair advantage to their Detroit-based rivals.

Automakers sold a record 652,000 EVs last year, but those accounted for just 4.4 percent of new car sales, according to an analysis by BloombergNEF. The percentage doubled from just over 2 percent in 2020. SUVs and pickup trucks made up about 70 percent of total sales in 2021, according to Kelley Blue Book.

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