Many of us that follow EV trends know that the US is substantially behind both the EU and China in terms of both the number of EVs on the road and the infrastructure that is in place to support growth of the EV footprint in the US. For months we’ve been hearing about ambitious goals from the current administration that Congress has been working towards legislating with new bills that would improve all types of infrastructure, including the push to expand sales of zero-emissions vehicles. Nothing has been signed into law yet, but with the Senate passage of the bipartisan infrastructure bill (also called the Infrastructure Investment and Jobs Act), we know what that bill currently looks like. Then there is the separate bill referred to by several names: the American Families Plan, the Build Back Better bill, the human infrastructure bill, and the $3.5T social spending bill (although it probably won’t be $3.5T when negotiations run their course). Even the latter bill will likely have some EV-centric content based on what we’ve heard from lawmakers, especially those from Michigan. So, with everything subject to change—where are we?
The Bipartisan Infrastructure Bill
The bipartisan infrastructure bill that passed the Senate is a $973 billion bill (over 5 years) with $579 billion in new spending to rebuild America’s roads, bridges, boost transit and rail funds, upgrade airports, ports, and waterways, invest in broadband infrastructure and water infrastructure. It would be paid for through a combination of redirecting unspent Covid-19 relief funds and other measures.
The bill includes $7.5 billion for zero and low-emission buses and ferries, aiming to deliver thousands of electric school buses to districts across the country. It also has $7.5 billion for building a nationwide network of EV charging stations. There is also $65B in this bill for funding for our national electrical grid, also key to supporting the growth of EVs in the US. The funding will go toward building thousands of miles of new power lines and expanding renewable energy. There is also an additional $50 billion for resiliency, to help protect the grid from extreme weather and cyber-attacks. Originally the funding for EV charging infrastructure was higher to meet a goal of having an additional 500,000 public charging stations, so there are discussions about whether there will be additional charging infrastructure funded in the Build Back Better Bill.
The Build Back Better Act
This second, broader infrastructure legislation still has a hill to climb, as it has not crossed the finish line in the Senate or the House. Without dwelling on the politics, this is a massive bill that includes a lot of things that are not specifically relevant to the EV discussion. However, one set of priorities in that could end up in this bill are reforms to the EV consumer rebate program.
Today, buyers of NEW EVs can hope to receive at most a $7500 federal income tax credit. That is based on the purchaser’s income tax bill and make/model of new EV purchased. The model matters because the amount of credit is determined by battery size. The make of the vehicle matters because the existing program caps manufacturers at 200,000 new vehicles, so new Teslas and new GM EVs are not currently eligible for credits.
Here’s what was proposed in (and didn’t make it into) the bipartisan infrastructure bill:
- Remove the 200,000-vehicle limit per manufacturer
- Keep the $7500 incentive for new EVs for 5 years
- EVs with battery packs smaller than 40 kWh are limited to $4K incentive
- Make the $7500 incentive a point-of-sale discount instead of a tax credit
- Up to $12,500 incentive for EVs using battery packs with over 50% of components (including cells) made in the US
- After the first 5 years, the $7500 applies only to US-made EVs and applies for another 5 years
- Introduces price limits on the EV, so luxury models are not eligible
- Sedans must be under $55K
- SUVs under $69K, Pickups under $74K
- Vans under $54K
- Income caps are also proposed that limit access to incentives. Individuals with Adjusted Gross Income of over
- $400K and joint filers over $800K are not eligible.
- A smaller incentive for up to $2500 for used EVs has also been proposed
Will the additional funding for EV charging infrastructure and the reforms to the EV consumer incentive program make it into the Build Back Better bill? Maybe the better question is whether one or both of the bills make into law this year. If so, it won’t be enough to slam dunk the EV market forecasts, but it will be a step or steps in the right direction.