$12,500 EV Tax Credit Survives in Biden's Build Back Better Spending Bill

author: Vineeth Joel Patel   

Earlier this May, the Senate Finance Committee advanced the Clean Energy for America Act. The legislation came with a large change to the federal tax credits for electric vehicles. Under the legislation, the federal tax credit for EVs goes up to $12,500, depending on a few conditions. While it was just a legislation back in May, the legislation has made it into a $1.75 trillion tax and spending proposal that the White House unveiled earlier this week.

Higher EV Credits Coming

Recently, President Biden announced the newest version of the Build Back Better spending bill that includes a large set of investments in clean energy initiatives that total up to $555 billion to help curb climate change and boost the acceptance of clean energy sources. The spending bill includes the proposed $12,500 EV tax credit from the original legislation in May, but still needs to pass both houses of Congress before President Biden can sign it into law.

As Bloomberg reports, President Biden stated that the proposal, when paired with an infrastructure bill that previously had already passed the Senate, should boost the market for electric cars. The latest proposal also has funds to increase the number of charging stations in the country.

"We'll build out the first ever national network of 500,000 electrical vehicle charging stations all across the country so when you buy an electric vehicle — and you'll get credit for buying it — you can go all the way across America on a single tank of gas, figuratively speaking," said Biden in a televised address.

The proposed tax credits with the proposal are similar to what we saw from the legislation in May. The current $7,500 federal tax credit for qualifying electric cars continues to exist, but there's more for certain cars. The emphasis with the proposal is to buy an electric vehicle made by unionized workers. If an automaker builds the electric vehicle in America, consumers can get an additional $2,500. Having a unionized workforce build the vehicle brings an additional $2,500. A new part of the proposal would allow shoppers to benefit from an additional $500 for electric vehicles that are made with batteries built in the U.S., claims Bloomberg. This is the first time we've heard about the tax credits for American-made batteries.

Not All Are For The New Proposal

As we noted in May, this proposal will greatly benefit American automakers like Ford, General Motors, and Stellantis. These automakers have factories in the U.S. and have unionized workers. One automaker that would be left high and dry would be Tesla. Its vehicles are made in the U.S., but not by unionized workers.

As Automotive News reports, the decision for the Biden Administration to move forward with the legislation has brought some opposition from 11 Republican governors. "We cannot support any proposal that creates a discriminatory environment in our states by punishing autoworkers and car companies because the workers in their plants chose not to unionize," the governors write in the letter. Republic governors aren't the only people that oppose the proposal. In September, executives from 12 international automakers including Volkswagen, Honda, and Toyota announced their opposition to the legislation, claiming that it has "policies that slow progress toward meeting our nation's climate goals."

We'll have to wait and see if the current spending bill and the included EV tax credit gets passed, but it's a good sign for interested shoppers.

Vineeth Joel Patel

Joel Patel has been covering all aspects of the automotive industry for four years as an editor and freelance writer for various websites. When it comes to cars, he enjoys covering the merger between technology and cars. In his spare time, Joel likes to watch baseball, work on his car, and try new foods