Congress passes $1.2 trillion infrastructure bill, $12,500 EV tax credit still awaits passage

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After an entire day (and indeed months) of deliberation and negotiations, Congress approved a long debated infrastructure bill totaling $1.2 trillion. The 228-206 vote held by the US House of Representatives early Saturday morning will put a core piece of President Biden’s domestic legislature into action. While 6 Democrats didn’t vote for the bill, 12 Republicans joined

While this is a huge win for the Biden administration, the President and House Speaker Pelosi were unable to land a vote of passage for the “Build Back Better Act” which includes a restructured federal tax credit for EVs to up to $12,500.

From day one of President Biden’s tenure in the White House, he has shared clear intentions to utilize Democrat majorities in Congress to get some major infrastructural legislation passed.

This cash injection into US infrastructure focuses on improving everything from roads, to waterways, and the promotion of electric vehicle adoption nationwide.

One of the early terms of Biden’s proposed bill was a restructuring of the country’s current federal tax credit program for zero-emission vehicles. The current program offers US consumers up to $7,500 in federal tax credits for EV purchases, but limits the incentives for automakers at 200,000 unit sold.

For that reason, major American manufacturers like Tesla and GM have long surpassed that threshold, and their customers have been unable to take advantage of the credit.

Since the infrastructure plan was introduced earlier this year, it has faced opposition from conservatives and moderates in Congress and seen many iterations.

Earlier this week, we reported that Congress’ most recent reform on the bill still included the $12,500 EV tax credit which had been folded into the Build Back Better Act to stay alive.

With the latest news out of the Capital early Saturday morning, a major infrastructural bill has passed, but the “Build Back Better Act” remains in limbo, at least for now.

12500 EV tax credit
The current incentive cap for American automakers like Tesla and GM / Source: fueleconomy.gov

The $1.2 trillion for infrastructure is a huge step forward

Early this morning Axios shared news that the House had voted to pass a $1.2 trillion infrastructure bill proposed by the Biden administration that will be spent over eight years. A ways off from the $2.25 trillion in spending originally proposed in March, but a victory for the President nonetheless.

While many of the exact spending details are still to come to light, the approved $1.2 trillion will include $550 billion in new spending and includes the following:

  • $110 billion for roads, bridges and other infrastructure rehab nationwide (The US infrastructure system earned a C- from the American Society of Civil Engineers earlier this year)
  • $7.5 billion for electric vehicles and EV charging infrastructure
  • $2.5 billion in zero-emission buses
  • $2.5 billion in low-emission buses

What truly stands out in this approved bill is the $7.5 billion promised to help establish a nationwide network of EV charging stations. Furthermore, an additional $65 billion will be invested toward overall clean energy and renewables for the US electricity grid, hardening a long antiquated system.

Several House progressives voted against the infrastructure bill, calling for the “Build Back Better Act” to be approved simultaneously. Those Reps. include:

  • Rep. Jamaal Bowman of New York
  • Rep. Cori Bush of Missouri
  • Rep. Alexandria Ocasio-Cortez of New York
  • Rep. Ilhan Omar of Minnesota
  • Rep. Ayanna Pressley of Massachusetts
  • Rep. Rashida Tlaib of Michigan

However, thirteen Republicans crossed party lines to get the infrastructural part of the package over the finish line. While Build Back Better remains in limbo, it should still see passage soon, at least in some iteration.

$12,500 EV tax credit still alive, but not yet approved

House speaker Nancy Pelosi began Friday’s congressional session with plans to vote on the $1.75 trillion “Build Back Better Act” and concurrently the $12,500 federal EV tax credit within it.

However, a small group of moderates in the House refused to support the legislation without a cost estimate from the Congressional Budget Office (CBO). As a result, the House approved a procedural vote required to open Biden’s “Build Back Better Act” to passage, following an official CBO cost estimate.

Those moderates opposed all signed an assurance that they would vote in favor of passage once the score is released. This vote for the larger overall spending package should take place when Congress resumes after a week-long recess.

It wasn’t just moderates that oppose the current terms of the “Build Back Better Act” either. While domestic automakers like Ford applauded Congress for its work, some foreign automakers with non-union US manufacturing are already publicly denouncing the new EV tax credit unfair.

Toyota for example, has already launched an ad opposing the pro-union tax credit. Volkswagen is another company decrying the terms, calling the additional incentive “fundamentally wrong.”

While Tesla is an American automaker, it utilizes non-union labor, and under the proposed terms would also not qualify for the additional $4,500 incentive. That’s being said, its unit limit would be dissolved and it could claim at least some incentives once again.

The Build Back Better Act and its potential $12,500 EV credit still awaits passage following the CBO score and official Congressional approval. A lot can change between now and the official signature in the oval office, but here are the latest terms introduced earlier this week.

Note – these exact terms are not confirmed until the bill has been officially passed:

  • Federal tax credit for EVs jumps from $7,500 to $12,500
    • Keep the $7,500 incentive for new electric cars for 5 years
    • Add an additional $4,500 for EVs assembled in the US using union labor
    • Another $500 for EVs using battery packs with 50% of components (including cells) made in the US
  • Zero-emission vans, SUVs and trucks with MSRPs up to $80,000 qualify (increased from previous policy)
  • Electric sedans priced up to $55,000 MSRP qualify (stays the same)
  • The full EV tax credit will be available to individuals reporting adjusted gross incomes of $250,000 or less, $500,000 for joint filers (decreased from $400,000 for individuals/$800,000 for joint filers currently in place)
  • EVs must be made in the US starting in 2027 to qualify for any of the $12,500 credit
  • Eliminates tax credit cap after automakers hit 200,000 EVs sold, making GM and Tesla once again eligible

All eyes will be on Congress as it reconvenes after its week-long recess.

Electrek‘s Take:

Obviously that’s a big win for EVs overall, but many Tesla (and foreign automakers that build EVs in the US with non-union labor) customers with wonder why such a big $4,500 added incentive needs to be applied to union made vehicles. Joe Biden is a self-proclaimed union guy obviously, but clearly that’s a lot of money.

Also, are automakers having a hard time selling EVs right now? Obviously Tesla has up to a year wait time for its vehicles and it isn’t like there is a bunch of inventory of Chevy Bolts, or Ford Mustang Mach-Es out there.

Ford F-150 Lightnings? Ford recently announced 160,000 orders which already matches its total output from now until 2025. So ordering one on today’s news would make it available in 2026, after a planned design update.

Hopefully automakers use today’s news to justify increased EV production plans for the US, something they should have done long ago. Ideally, it will also make infrastructure providers increase their production to scale in order to support the incoming influx of EVs.


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