According to new information related to a bill from the Biden Administration, Tesla and General Motors will benefit in a big way. If the bill passes – and it's expected to pass since the Senate now has a Democratic majority – the two automakers would be able to sell 400,000 more EVs that are eligible for a federal tax credit, though the credit would be $7,000 rather than $7,500.
The bill in question is the Growing Renewable Energy and Efficiency Now (GREEN) Act. It not only features a renewed and updated EV tax credit, but also other programs and incentives related to renewable energy.
The GREEN Act raises the EV tax credit cap to 600,000 vehicles. However, after a company sells 200,000 EVs, the maximum credit is reduced sightly, to $7,000. GM and Tesla have already sold 200,000 EVs in the U.S., which means these automakers' electric cars no longer qualify for the credit under the current rules. According to Teslarati, the GREEN Act's specifics related to the credit are as follows:
“The bill also extends existing tax incentives available for the sale of electric vehicles. The bill increases the electric vehicle credit cap for manufacturers to 600,000 vehicles, but reduces the credit by $500 after the first 200,000 vehicles sold. This would replace the current phaseout period that begins with 200,000 vehicles sold, with a phaseout period that instead begins during the second calendar quarter after the 600,000-vehicle threshold is reached.
“At the start of the new phaseout period created under the bill, the credit is reduced by 50 percent for one calendar quarter and subsequently ends. For manufacturers that already passed the 200,000 threshold before the enactment of the bill, the number of vehicles sold in between 200,000 and those sold on the date of enactment are excluded in determining when the 600,000 threshold is reached.”
The GREEN Act also stands to benefit people considering solar power adoption. If passed, it will include a five-year extension on the solar Investment Tax Credit (ITC). The current wording is as follows:
“The bill also extends the investment tax credit (ITC) for solar energy property at 30 percent through 2025, which phases down to 26 percent in 2026, 22 percent in 2027, and 10 percent thereafter. The bill uses the same phaseout timeline and percentages for geothermal energy property.”
The GREEN Act will almost certainly pass in the House. It's likely that the Senate will vote to approve it as well. However, despite the Democratic majority in both chambers, there's no way to know for sure how it will all play out. If Congress members simply vote along party lines, the GREEN Act will prevail, though some Democratic senators have been known to side with the Republican Party, especially related to aggressive forward-thinking measures.
We're eager to learn more about the situation, especially related to the timeline. This is a developing story. As new information becomes available, we'll update this article or provide a follow-up story.