The Democrats have proposed an updated electric car incentive program at the federal level.
The program would remove the limit on the number of vehicles and replace it with a timeline, introduce a higher payout up to $12,500 and make it point-of-sale. There is also a new restriction that would put Tesla at a $4,500 disadvantage.
The current program has some flaws. The main one is that it caps the $7,500 tax credit to 200,000 electric vehicles per manufacturer.
This puts automakers who were early proponents of electric vehicles, like Tesla and GM, at a disadvantage.
The biggest issue for Tesla though is that the full rebate only applies to Union made vehicles. As of today Tesla’s employees are not part of a Union and are therefore excluded from an additional $4,500 rebate.
Here are the main changes of the latest bill:
Remove the 200,000 vehicles per manufacturer cap
Keep the $7,500 incentive for new electric cars for 5 years
Make the $7,500 incentive a point-of-sale discount instead of tax credit
EVs with battery pack smaller than 40 kWh are limited to a $4,000 incentive
Add an additional $4,500 for EV assembled at union factories. This is the critical part that should be of interest to potential Tesla customers.
Add another $500 for EVs using battery packs with 50% of components (including cells) are made in the US
After the first 5 years, the $7,500 becomes only for US-made electric vehicles and it applies for another 5 years.
They are introduce price limits on the EVs eligible for the incentives:
Sedans under $55,000
SUVs under $69,000
Pickup trucks under $74,000
Vans under $54,000
They are also introducing caps on income to get access to the incentives, but they are fairly high at an adjusted gross income of up to $400,000 for individuals and up to $800,000 for joint filers.
As usual, these terms could change as the bill goes through the legislative process
Easy fix that I have recommended to Tesla for several years now: allow your employees to form their own union, and put labor reps on the board —like is the law in many EU nations. The UAW should not have a monopoly on collective bargaining for automotive workers!
I haven't looked up the history of Tesla price changes, but I'm certain they didn't drop the sticker price by anywhere near the full amount of the tax credit phase out for less expensive models. In 2018, the RWD M3 with no other options was $44k. I know that configuration was discontinued, but if prices dropped by $7500 when the tax credits phased out, then Tesla would have been selling something like the LR for just under $37k, and we know that never happened.
It may have been different for their higher-priced vehicles (Model 3 performance, Model S and X) where their margins are higher.
That’s a great question. I really don’t know but as they are currently doing this in the context of the budget bill, I would put my bets on either Oct 1, 2021 (beginning of federal fiscal year) or Jan 1, 2022 implementation.