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Featured Manchin climate bill and EV Tax credit reinstatement

Discussion in 'Prius, Hybrid, EV and Alt-Fuel News' started by Rmay635703, Jul 28, 2022.

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  1. Rmay635703

    Rmay635703 Senior Member

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    Quoted from here since the official information is terrible with spelling errors

    https://www.chevybolt.org/threads/us-energy-bill-agreement-ev-credit-details-2nd-7-28-update-11-06am-et.44941/

    • Effective as of December 31, 2021 (backdated, appears to only apply to the old law provisions)
      • Contracts written in 2022 can still be capitalized in 2023 under old law.
    • GM vehicles now qualify again, per-OEM limits removed (appears to begin on 1/1/23)
    • Now a refund instead of a credit (everyone gets back full regardless of what you pay in Federal taxes) This can be applied at time of sale, big point
    • Cars in contract as of the signing of the bill can use old bill (so if you have an EQS on order and make $400k, you're $7,500 is intact). This is good until December 31, 2022
    • $7500 still
      • Must be assembled in North America
      • $3750 dependent on how much of your battery comes from North America (minerals and materials), 40% is the apparent number, countries with free trade agreements w/ US also apply
        • Inceases to 50% in 2024
        • 60% 2025
        • 70% 2026
        • 80% 2027
      • $3750 with same above restrictions based on 50% of components originating in US, North America or free trade countries.
        • 60% in 2024
        • 70% in 2026
        • 80% in 2027
        • 90% in 2028
        • 100% in 2029
      • In 2025 any vehicle with battery minerals or components from a "foreign entity of concern" will be excluded
    • Income restrictions
      • 150k max individual filing
      • 225k max head of household filing (eg, divorced with child dependent)
      • 300k max married filing jointly
    • Per car MSRP restrictions
      • $55,000 on passenger cars
      • $80,000 on light duty trucks and SUVs
    • Used credit now exists
      • $4,000
      • Car must be 2 years old to qualify
      • Prorated to 30% of total value of car or $4,000, whichever is less
      • Used vehicle must be purchased from a dealer.
      • Used vehicle price must be $25k or less.
      • Used vehicle qualifies for tax credit only once in its lifetime.
      • Purchaser must be an individual (no businesses) to qualify for used credit.
      • Purchaser may only claim one used vehicle credit per three years
      • Modified gross income cap of $75k for individuals, $112,500 for head of household and $150k for joint returns.
    • Vehicle classifications not determined by EPA but instead as deemed by transportation secretary.
      • Secretary has till EOY to outline guidance on battery requirements (unclear what this means, range perhaps?)
    • Sunset clause (dead bill) in 2032

    • Manchin says he has reached deal with Schumer on economy, climate bill - The Washington Post


    • Also mentioned in related post here

    • Toyota Runs Out of US Tax Credits for EVs - Bloomberg.com: 07/01/2022 | PriusChat

     
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  2. Salamander_King

    Salamander_King Senior Member

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    Thanks for the summary.

    I guess, it is best to hold off on the purchase of a BEV until we have a definite law in place. Yeah, a full refund applied at the point of sale is a huge advantage over the current tax credit. I hate to jump the bandwagon this year and purchase a BEV only to find out that if I waited for 6 months I could get it for less.
     
  3. hill

    hill High Fiber Member

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    what's to say the stealerships won't take advantage of these incentives by jacking up the prices, as they already do.
     
  4. Rmay635703

    Rmay635703 Senior Member

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    Nothing, the credit does have MSRP limits but not on sale price .

    Should change the terminology so dealers above MSRP don’t get the credit
     
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  5. mikefocke

    mikefocke Prius v Three 2012, Avalon 2011

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    I happened to be checking inventory on Toyotas in a neighborhood I used to live in. Would cost me an extra $12k to buy the same car I bought 3 years ago. And 8 of that is dealer profit and add-ons. Yes dealers will profit.

    And don't assume the bill as written is going to pass. Wait till it has passed and is signed. It still only takes one vote to block it.

    My local Senator just voted no on a bill he was a sponsor of.

    Vote all the bums out, even yours.
     
    #5 mikefocke, Jul 28, 2022
    Last edited: Jul 28, 2022
  6. bisco

    bisco cookie crumbler

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    i've been trying to get rid of ed markey for the last 50 years
     
  7. Rmay635703

    Rmay635703 Senior Member

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    Similar to Scott Fitzgerald, I voted against him forever so we upgraded him from a local problem to a federal problem
     
  8. Gokhan

    Gokhan Senior Member

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    https://electrek.co/2022/07/27/senate-moves-forward-ev-tax-credit-reform-tesla-tsla/

    Update: here’s a more detailed look at what is in the bill written by an actual lawyer, Chris Stidham:

    New-Vehicle Credit

    1. Manufacturer caps eliminated. (Page 370, line 15)
    2. Credit applies for vehicles purchased beginning January 1, 2023. (Page 386, line 1).
    3. Transition provision for EVs with written sales orders dated in 2022 prior to the date of President signing the bill but delivered in 2023 allows purchaser to claim the “old” credit in 2023. (Page 386, line 20).
    4. Vehicle must be assembled in North America to qualify for new credit. (Page 366, line 15).
    5. North American assembly requirement applies to vehicles sold after the date of adoption of the bill. (Page 386, line 3)
    6. $7,500 credit is broke into two binary pieces meaning the vehicle either qualifies for each piece of the credit or it doesn’t. No longer based on size of battery. (Page 366, line 6)
    7. $3,750 of the new credit is based upon the vehicle having at least 40% of its battery critical minerals from the United States or countries with a free trade agreement with the United States. This is a list of countries with free trade agreements with the US.(Page 371)
    8. The other $3,750 of the new credit is based on at least 50% of the battery components of the vehicle coming from the United States or countries with a free trade agreement with the US. (Page 372, line 13)
    9. The 40% minerals requirement increases to 50% in 2024, 60% in 2025, 70% in 2026 and 80% in 2027. (page 371 line 23)
    10. The 50% battery components requirement increases to 60% in 2024, 70% in 2026, 80% in 2027, 90% in 2028 and 100% in 2029. (Page line 373)
    11. The government has until the end of the year to develop guidance on the battery requirements. (Page 374)
    12. Beginning in 2025, any vehicle with battery minerals or components from a foreign entity of concern are excluded from the tax credit. (Page 374, line 20).
    13. One credit per vehicle. (Page 375, line 12)
    14. Modified gross income limit of $150k for individuals, $225k for head of household, and $300k for joint returns. Definition of MAGI (page 375, line 22)
    15. MSRP of vehicle must be $80k or less for SUVs, Vans and Trucks. $55k for all other vehicles. (Page 377, line 4)
    16. Dealer can apply credit at time of sale. Dealer must disclose to buyer the MSRP of the vehicle, the applicable tax credit amount and the amount of any other available incentive applicable to the purchase. (Page 378, line 6)
    17. Credit terminates December 31, 2032.
    Used-Vehicle Credit

    1. Tax credit of 30% of value of used EV with $4,000 cap (Page 387, line 23).
    2. Used vehicle must be at least two model years old at time of sale. (Page 389, line 7).
    3. The original use of the vehicle must have occurred with an individual other than the one claiming the used tax credit. (Page 389, line 10).
    4. Used vehicle must be purchased from a dealer. (Page 390, line 3).
    5. Used vehicle price must be $25k or less. (Page 390, line 5).
    6. Used vehicle qualifies for tax credit only once in its lifetime. (Page 390, line 7)
    7. Purchaser must be an individual (no businesses) to qualify for used credit. (Page 390, line 14).
    8. Purchaser may only claim one used vehicle credit per three years. (Page 390, line 20).
    9. Modified gross income cap of $75k for individuals, $112,500 for head of household and $150k for joint returns. (Page 388).
    10. Credit may be applied at time of sale by dealer. (Page 391, line 15).
    11. Credit terminates on December 31, 2032. (Page 391, line 12).
     
    #8 Gokhan, Jul 28, 2022
    Last edited: Jul 28, 2022
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  9. prius16

    prius16 Active Member

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    Fwiw, the final details will change. And, it may be dropped completely.
    Btw, all Prius Primes are assembled in Japan - which, last time I checked, is not in North America.
     
  10. ETC(SS)

    ETC(SS) The OTHER One Percenter.....

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    They eliminated the Union requirement?
    Or am I miss-remembering the original BBB credit?

    I like the price caps. The earnings limits are laughable, but eventually inflation will moderate that.

    I really like the used EV credits.
    I see new life for a lot of 7-8 bar leaves.

    We will see….
    They SAID it out loud.
    Now let’s see if they can push the trash can all the way out to the curb. :ROFLMAO:
     
  11. Salamander_King

    Salamander_King Senior Member

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    Thanks for summarizing this complex tax bill. I did not read all... stopped at #4.

    4. Vehicle must be assembled in North America to qualify for new credit.

    Well, this means non of the Japanese EVs will qualify. How about Korean EVs? Exactly how many BEV are there which would satisfy this checkpoint?

    And, item #3 will play a role for someone contemplating buying bZ4X or Solterra or Ariya.

    3. Transition provision for EVs with written sales orders dated in 2022 prior to the date of President signing the bill but delivered in 2023 allows purchaser to claim the “old” credit in 2023. (Page 386, line 20).

    If I understand this correctly, someone purchasing bZ4X or Solterra or Ariya or any other BEV not assembled in North America in 2022 and took delivery in 2022 would still be able to claim the old credit in 2023 tax return (for 2022 income tax). But for someone who completed the written sales order in 2022 but did not take delivery until after Jan 1, 2023, he/she would also be allowed to claim the old tax credit in 2023 tax return (for 2022 income tax). So provision #3 adhere to the old (meaning current) tax code? If so, bZ4X with written sales order in Aug 2022 but delivered in Jan of 2023 would still qualify for a full $7500 tax credit in the 2023 tax form (2022 income tax). On the other hand, if the sales order is written after the Sep 1, then the tax credit would be half. And if it is purchased after Jan 1, 2023, then it gets no discount since it is not assembled in North America. Am I correct?

    Yeah, the plot thickens. I don't know if I should hurry to get a BEV or wait till next year.
     
  12. ETC(SS)

    ETC(SS) The OTHER One Percenter.....

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    If BEVs make sense, they make sense without the government kickbacks......

    But yeah, $7500 (or $4000) ain't nothing.
    If I'm reading the prop correctly (only the briefest skim so far) then a vehicle purchased this year that meets the requirements under the provisions of the bill would qualify for a 2023 kickback.
    2022 kickbacks are what they are.

    NOTE:
    As mentioned above, this is pretty far from being a fait-accompli.
    There's COVID, 2022 midterm consequences, a razor-thin house majority, a looming August recess, and the prop still has to pass parliamentarian muster.
    Senate leaders don't get their jobs by being dumb or naïve, so there's a pretty good chance that some of this bill will get in under the wire - but there's many a slip between the cup and the lip.

    SO...
    If I were in the market for an EV, and could actually FIND one that meets the terms of the reconciliation bill I'd be tempted to buy sooner rather than later. I'd use the limits set forth under the current legislation as a guide and try to stay away from the guard-rails, because all of the objectionable parts of the legislation (like, how to PAY for it) be the parts that change, and the shiny bauble that draws the eye away from the objectionable part (the kickbacks) will probably survive anything that makes it through reconciliation.

    I tried to get the full 750-page bill, hilariously named BTW the “Inflation Reduction Act of 2022” but the source I found during my brief search did not pass my VPN's sniff-test.
     
  13. Trollbait

    Trollbait It's a D&D thing

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    https://www.leafscore.com/auto/best-american-made-evs-to-watch-in-2022/
    I think Bollinger is no more, but there are other models coming from American brands.
    Looks like the only foreign brands with NA factories for EVs are VW and BMW at this time.
     
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  14. Salamander_King

    Salamander_King Senior Member

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    This is the first time I have heard of Bollinger...
    Well, maybe I better start looking for ID.4 in stock and cancel the Solterra order.
     
  15. Rmay635703

    Rmay635703 Senior Member

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    EV Credits Could Be Back, With a Catch

    It was tempting when Democrats announced their surprise climate deal to imagine American auto executives popping champagne bottles. But any bubbly probably ought to stay on ice until Washington finalizes the fine print of the bill that would lift the cap on tax credits for electric vehicles.

    Just three months ago, Senator Joe Manchin said it would be “ludicrous” to extend the $7,500 incentive with inflation running hot and automakers struggling to keep up with demand. That comment all but dashed the hopes of car companies that had been lobbying the Biden administration to lift the 200,000-vehicle limit at which the perk begins to wind down. Tesla, GM and Toyota have crossed that threshold; Nissan and Ford are closing in.

    While Wednesday’s news represented sweet relief, it’s still unclear just how stingy this bill will be about eligibility. For EVs to qualify, their batteries will need to contain minerals extracted from or processed in a country the US has a free trade agreement with, and a portion of components to be manufactured or assembled in North America.

    These requirements would start phasing in for components after 2023 and minerals after 2024, timelines that could be tricky to meet. Automakers and battery manufacturers are spending billions on new North American factories, but many of these facilities are still being planned and constructed. China — America’s trade nemesis — accounts for almost three-quarters of manufacturing capacity for lithium-ion batteries and more than half the world’s capacity to refine lithium.

    Manchin may have come around, but he’s setting the bar high for carmakers, requiring them to use a domestic supply chain that hasn’t fully materialized yet.

    “This ties that noose a little tighter,’’ said Jeff Yambrick, a former executive at Chinese battery maker Svolt, who’s now running a startup that sets up cell factories and supply chains for firms operating in the US. “You have to do things in America.”

    The legislative text released this week could change before it wins approval by Congress. But it’s clear Beijing is on Washington’s mind. Manchin himself told Bloomberg’s Steve Dennis that the EV credits are designed to keep China from dominating battery components and critical minerals.

    While this level of scrutiny on China is no surprise, it could be a headache for Contemporary Amperex Technology Co. Ltd. and its customers. The giant Chinese company has been scouting factory sites in North America and just reached a deal to supply lithium iron phosphate batteries to power Ford’s Mustang Mach-E sport utility vehicles and F-150 Lightning pickups.

    Manchin and his fellow China hawks must be careful not to go too far and set content targets that push the auto industry deeper into the arms of Chinese suppliers, said Abigail Wulf, the director of critical minerals strategy at Securing America’s Future Energy, a Washington-based nonprofit that advocates for US energy independence.

    “If this isn’t enacted properly, with the right amount of finesse, we’ll be even more beholden to China,” Wulf said in an interview. “We want to make sure this is workable for the auto companies.”

    Bloomberg reached out to seven automakers about the bill, most of which said they’re still getting their arms around it. In its current form, it would lift the EV sales cap at the end of this year and extend availability of the credits by a decade.

    “If you look at the landscape as it exists today, it's a challenge, but it's doable,” said Joe Britton, the head of the Zero Emission Transportation Association, which advocates for EV adoption. “We can meet these metrics.”

    - Bloomberg, 29 July 2022
     
    #15 Rmay635703, Jul 29, 2022
    Last edited: Jul 29, 2022
  16. ETC(SS)

    ETC(SS) The OTHER One Percenter.....

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    ... .- -.-- / .- --. .- .. -. ..--..
     
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  17. ETC(SS)

    ETC(SS) The OTHER One Percenter.....

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  18. John321

    John321 Senior Member

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    I support responsible living including managing the pollution we generate. I ride a bike around town, recycle and have a PHEV. We do our best to live responsibly.

    As a citizen who realizes the Government only has money it takes from its citizens, I am wary of any Government giveaways.

    With runaway inflation and a National Debt that is hard to actually imagine - where will this money for the "free" program come from?

    Wait a minute, I just realized where it will come from as my hand involuntary shot to my wallet to protect it when someone mentioned a Government program.

    Why not let things like high gas prices and EV manufacturing competition bring prices down rather than having us citizens subsidize it?

    A Government also has the power to legislate car manufacturing just as they did to mandate seat belts and rear cameras.
     
    #18 John321, Jul 29, 2022
    Last edited: Jul 29, 2022
  19. Trollbait

    Trollbait It's a D&D thing

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    US production only just started for the ID.4.
     
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  20. bisco

    bisco cookie crumbler

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    nature of the beast i guess. government is everywhere. as individuals, some things we like, and some we don't.
    it can also be based on our position in life, and our attitude toward our neighbor.

    i wish all the government money came from taxpayers. unfortunately, they also control the money supply...