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U.S. Congress Office Sees Few Tax Breaks for EVs Under Democratic Plan


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Washington DC August 4, 2022; The AIADA reported that a proposal by U.S. Senate Democrats to put income, price and domestic content conditions on electric vehicle tax breaks could initially sharply curtail the number of EVs that qualify, the Congressional Budget Office said on Wednesday.

The CBO estimate said the electric vehicle tax credits in a $430 billion climate and energy bill would cost taxpayers only $85 million in 2023, the equivalent of about 11,000 vehicles if all received $7,500 credits.

Industry officials said it will be nearly impossible to achieve the domestic content rules calling for 50 percent of battery components to be manufactured in North America before 2024 and 60 percent by 2024-2025.

Auto dealers are worried they "will be left trying to explain to consumers why these incentives aren't available to them," Cody Lusk, president of AIADA said Wednesday.

The Manchin-Schumer proposal would also create a new $4,000 tax credit for used EVs reports Reuters. The CBO estimates that would cost the government $1.35 billion over 10 years.

It would translate to tax breaks for buyers of about 337,500 used EVs over that time.

Democrats are divided over the proposals, even as Republican lawmakers are closing ranks in opposition.

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