Democrats in the House of Representatives have reintroduced the GREEN Act which would reintroduce the federal EV tax credit for companies including Tesla and General Motors.
The U.S. government first started offering tax credits to buyers of electric vehicles under the Bush administration before the program was expanded by Barack Obama. It provides $7,500 in tax credits to every buyer of an electric vehicle but once a carmaker sells more than 200,000 EVs locally, the tax credit is gradually reduced. Tesla’s credits ran dry in late 2019 while GM’s ended in March 2020.
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Last week, however, Representative Mike Thompson and Chairman of US House Ways and Means Subcommittee on Select Revenue signed the bill that will be introduced to Congress with the hope that it will be approved by the Democratic-controlled Senate and Biden administration, CNET reports.
The 2021 version of the GREEN Act reduces the maximum available EV tax credit to $7,000 but eliminates the cap of 200,000 vehicles to be eligible for the full credit. In fact, the new bill would cap the credits at 600,000 qualifying vehicles sold, each giving Tesla and General Motors a further 400,000 cars they can sell to customers with the full $7,000 tax credit.
When an automaker hits the 600,000 vehicle mark, the 2021 bill alters the phase-out period, meaning the credit would be reduced by 50 per cent for a single quarter before being eliminated entirely.
Used car buyers would also benefit from the 2021 GREEN Act. In fact, a provision in the bill reveals that those who purchase a preowned electric car would be able to claim up to a $2,500 tax credit, as long as the EV is at least two years old and doesn’t cost more than $25,000.