The Clean Energy for America Act Seeks To Use More Taxpayer Money To Discount Expensive Electric Vehicles

The Clean Energy for America Act may change the EV tax credit system in an effort to incentivize electric vehicle production in the USA.
Image Via U.S. Capitol.

As the auto industry begins to shift towards electric vehicles with a slight push from governments around the world, EV tax credits have found their way back to the political ring. On Wednesday, the Senate Finance Committee advanced the new Clean Energy for America Act with a 14-14 split vote. Not quite ready for a full-blown Senate vote, this piece of legislation contains a serious overhaul of the current EV tax credit system. According to RoadShow, one that could see the monetary figure jump up to $12,500.

Larger EV Tax Credits

The large increase in the total eligible amount of cash is designed to help spur automakers to build more electric vehicles, which is something we know the current administration is keen on pushing. More specifically however, it is aimed at incentivizing automakers to build these machines in the United States with union labor. The Clean Energy for America Act retains the familiar $7,500 EV tax credit amount we’ve seen for a while now, but will now add some new twists. An additional $2,500 will now be awarded if an electric vehicle undergoes final assembly here in the United States. Another $2,500 more is on offer if the plant responsible for the EV is represented by a union. Crucially however, that latter bit of cash isn’t specific to U.S. production facilities.

2021 Ford Mustang Mach-E GT Performance Edition Electric Vehicle
Image Via Ford.

Who Wins:

This new EV tax credit layout could have an interesting effect on the auto industry here for a couple of reasons. General Motors’ allotment of tax credits had expired in 2020, so this piece of legislation would open the door for the automaker to get back in the game. Considering the company has been quite open about their intentions related to electrification, this would be greatly beneficial to them. Ford on the other hand won’t have things as good, as their Mustang Mach-E is built down in Mexico. The Blue Oval’s latest electric vehicle however, the Ford F-150 Lightning, would qualify for the full $12,500 EV tax credit under this plan. Tesla’s lack of unionized employees will hurt them in this regard as well.

There are some limitations to this Clean Energy for America Act worth noting. EV tax credits will no longer apply to any vehicle with an MSRP of over $80,000. This means that the Tesla Model S barely squeaks by with a base price of $79,990, though a single option drives it out of contention. GMC’s Hummer EV is also going to struggle to qualify, as the cheapest EV2 model will carry an MSRP of $79,995. That said, this price limit could help quell the onslaught of six-figure EVs we’re seeing today.

2024 GMC HUMMER EV ELECTRIC SUV Vehicle Vehicles
Image via GMC.

Split Senate

Based on the split Senate, the Clean Energy for America Act may struggle to find its way off of the floor. There will certainly be folks in the government who want to know where the extra funding is supposed to come from, which is a valid concern. That said, we’re sure that buyers wouldn’t mind seeing such a large chunk cut off of the effective price of their next vehicle. Regardless, we’ll keep you updated on the situation as things progress.

FCA purchased $362 million worth of regulatory credits from electric vehicle maker Tesla Motors in 2020
Image Via Tesla.

Written by Lucas Bell

Lucas holds a journalism degree from Wayne State University, and is a Automotive Press Association scholarship recipient. While an American muscle fan through and through, he once wrote a fascinating comparison review about eScooters.

One Comment

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  1. Big mistake. EV’s have been subsidized for decades and have have amounted to nothing but the fleecing of the American taxpayer. If it’s a legitimate product , the market will decide without the governments finger on the scale picking winners and losers.

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