President Joe Biden speaks during a visit to the General Motors Factory ZERO electric vehicle assembly plant on Wednesday, November 17, 2021 in Detroit.
Evan Vucci | AP
DETROIT – Now that President Joe Biden’s $ 1 trillion infrastructure bill has become law, Democrats are targeting his Economic Recovery Act to further advance the government’s electric car agenda.
The bipartisan Infrastructure and Jobs Investment Act provides $ 7.5 billion to accelerate Biden’s goal of installing 500,000 electric vehicles nationwide by 2030. The $ 1.75 trillion Building Efficiency Act passed Friday by the US House of Representatives includes tax breaks of up to $ 12,500 per vehicle. stimulate consumer demand for electric vehicles.
“The Infrastructure Act signed by the President this week is an important step in investing in our future,” Michigan-based Sen. Debbie Stabenow said at the GMC Hummer Biden EV in Detroit. “We are now focused on the next step.”
The event at General Motor’s Factory Zero was pretty much a parade of Michigan Democrats touting Build Back Better and using upcoming Hummer production as a soapbox to advertise union-built cars.
“This infrastructure law with my Build Back Better plan, we are going to start manufacturing and recycling new batteries, materials and parts, stimulating green cars with new credits and new tax breaks,” Biden said during the event. “Providing new incentives for buyers to buy environmentally friendly American-made vehicles such as the electric Hummer.”
The $ 1.75 trillion “Build Back Better” bill will now be submitted to the Senate, where it is likely to be revised in the coming weeks. Senate Majority Leader Chuck Schumer said he is committed to getting the House passed the law before Christmas. If the bill is amended, the House of Representatives will need to vote again.
The proposed Build Back Better EV incentive includes a current $ 7,500 tax credit for the purchase of a plug-in electric vehicle, as well as $ 500 if the vehicle’s battery is manufactured in the United States. It also includes a controversial $ 4,500 tax credit if the vehicle is assembled domestically. union labor that has drawn strong criticism from automakers outside Detroit, whose American workers are not organized.
Toyota Motor called the union’s incentive “clearly biased” and “wrong.” Tesla CEO Elon Musk also sharply criticized this incentive and Biden for his support of unions such as the United Auto Workers union, which represents workers at the Detroit automakers’ factories.
Tax breaks to support advanced technologies that typically benefit wealthier Americans have always been controversial, but the requirement that some of the $ 12,500 go to union-produced electric vehicles has exacerbated party tensions. Biden does not apologize for his support for the unions.
“We have to focus on what made the country great. I have no problem with Wall Street bankers and others, ”Biden said Wednesday. “But they didn’t build America. The middle class built America and the unions built the middle class. “
Under the bill, individual taxpayers report an adjusted gross income of $ 250,000 or $ 500,000 for co-tax fillers to obtain a new electric vehicle tax credit. It will also limit credit for electric vehicles to $ 55,000 or less and for trucks and SUVs to $ 80,000.
“More critical bill”
BofA Global Research analyst John Murphy described the infrastructure package as “only moderately supportive” for the automotive industry’s transition to electric vehicles. He said the $ 12,500 tax break on the purchase of an electric vehicle is more important to boost adoption.
“As noted, the Biden administration’s Build Back Better program is a more important bill that defines regulatory support for the electrification revolution in the United States,” Murphy wrote in a note to investors last week.
US President Joe Biden gestures after driving a Hummer electric car during a trip to General Motors Factory ZERO’s electric vehicle assembly plant in Detroit, Michigan on November 17, 2021.
Jonathan Ernst | Reuters
Transportation officials touted Build Back Better last week as a key part of Biden’s plan, along with a new infrastructure package to help meet the president’s EV target. He wants half of all new cars sold by 2030 will be electric vehicles, including plug-in hybrid electric vehicles, which include electric vehicle batteries and traditional combustion engines.
Goldman Sachs analyst Mark Delaney believes such incentives for electric vehicles could make the overall purchase price of a vehicle “more attractive and beneficial” to automakers by making their products more affordable to consumers.
An “ambitious” goal
Meanwhile, the infrastructure package only covers a fraction of the funds needed to build a truly nationwide charging network.
The $ 7.5 billion is just about 15% of the $ 50 billion that consultancy firm AlixPartners predicts will be required to meet Biden’s goal of building a nationwide network of 500,000 chargers by 2030.
According to experts, the construction of this building will require numerous investments from the public and private sectors. They characterize the infrastructure package as a positive step in the right direction.
“Of course, not all of this will come from the government,” said Mark Wakefield, global co-leader of automotive and industrial practice at AlixPartners. “Presumably, it will be more from utility companies, car makers, chargers, convenience stores, gas stations installing chargers … The fact that there is any investment in this is a good thing.”
Before Biden signed off on the infrastructure package, US Deputy Secretary of Transportation Polly Trottenberg said the 500,000 charger target remains “ambitious.”
“We stick to our goal. Our goal is to bring the number of EV chargers to 500,000 by 2030. Obviously, this will require strong partnerships at the state and local level, as well as with private suppliers, ”she told reporters during a phone call last week. “This is an ambitious goal, but I think we will not have a plan to achieve it, and we will also work with our partners from the Department of Energy.”
According to Christopher Coase, the chief deputy assistant secretary in the office of the assistant secretary for transportation policy, the DOT and DOE have created a joint program office under the Infrastructure Utilization Bill.
DOT officials declined to say how many electric car chargers they plan to install, given the $ 7.5 billion infrastructure bill. Devices, depending on their charging speed, According to AlixPartners, installing Level 3 “fast chargers” can cost anywhere from $ 120,000 to $ 260,000.
“The goal of our program is to figure out how we can build a market? How to ensure that we invest in places that are not the first places private sector investors are going to go, ”he said, referring to inner cities: apartment buildings and along interstate highways.
– CNBC Michael Bloom contributed to this report.