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Automakers Brace for GOP-Led House to Try to Erode EV Incentives

Nov. 17, 2022, 3:00 PM

Automakers have long relied on incentives to bolster the electric-vehicle market. With Republicans now set to take control of the US House of Representatives next year, the industry isn’t so sure it can count on those perks much longer.

The Republican takeover of the House could potentially imperil initiatives from EV credits to funding for charging stations passed in recent years by Democrats, who retained control of the US Senate in last week’s elections. Even if lawmakers don’t actively undo incentives, they could still let some programs phase out.

Prominent conservative lawmakers who are likely to play outsized roles in national debates under the coming Republican-led House like Georgia Representative Marjorie Taylor Greene have derided the Biden administration’s push to accelerate the transition to electric cars. In an October campaign appearance in Michigan, Greene accused Democrats of wanting to “emasculate the way we drive and force all of you to rely on electric vehicles.”

Automakers are bracing for changes under a GOP-led House but aren’t likely to overhaul their positions, industry leaders say, particularly as new EV plants and jobs garner increasing support from lawmakers on both sides of the aisle.

“I’ve been around long enough to know that elections can mean a shift in policy priorities in Washington and state capitals, but it won’t fundamentally change the top automaker priorities: electrification, automation and connectivity,” said John Bozzella, chief executive officer of the Alliance for Automotive Innovation, which represents companies such as Ford Motor Co., General Motors Co. and Honda Motor Co.

Here are some key programs that could be in line for changes following the election:

Charging Stations

Since President Joe Biden took office, Congress has appropriated $7.5 billion for electric-car charging stations, down from an initial request of $15 billion. Carmakers argue more is likely to be needed to convince consumers to go electric, but the prospects of more money from a GOP Congress are unclear.

Consumer Tax Credits

Automakers have been pushing the federal government to ease restrictions that limit the $7,500 credits for consumer purchases. Under a new law, the credits are only applicable to cars where the battery materials are sourced from the US and certain countries. Since China is a key provider of these materials, the industry is concerned that many of their US car models won’t qualify. Republicans have historically opposed the tax credits, arguing they’re a giveaway for rich Tesla Inc. car buyers.

See also: Ford, Toyota are at odds with their suppliers over EV tax credit

Used Car Incentives

Under a new law, used EVs -- at least cheap ones -- will qualify for the tax credit for the first time. A $4,000 credit for some cars will become available after Dec. 31 for buyers with income under certain thresholds. Also for the first time, starting in 2024, consumers who buy new or used clean vehicles at registered dealers would be allowed to receive discounts at the point of sale equal to the value of their credits. The tax credits are set to last for 10 years, unless new congressional leaders move to repeal them early.

EV Cap

Under an old policy, only the first 200,000 EVs sold by a given manufacturer qualified for tax credits -- irking companies such as GM and Tesla, which had surpassed the limit. Beginning next year, their vehicles will be eligible again -- as long as they meet the new sourcing requirements. That could be undone if all or some of the Inflation Reduction Act is repealed.

To contact the reporter on this story:
Keith Laing in Washington at klaing6@bloomberg.net

To contact the editors responsible for this story:
Chester Dawson at cdawson54@bloomberg.net

Richard Clough, Kevin Miller

© 2022 Bloomberg L.P. All rights reserved. Used with permission.