Key senator questions need for expanding US EV tax credit

By David Shepardson

WASHINGTON (Reuters) – A key Democratic senator on Thursday questioned the need to extend electric vehicle tax credits in the face of strong consumer demand and Chinese production of battery components.

Senator Joe Manchin, who is a crucial vote in the evenly divided Senate, raised concerns about the tax credit at a Senate hearing with Transportation Secretary Pete Buttigieg.

“There’s a waiting list for EVs right now with the fuel price at $4. But they still want us to throw $5,000 or $7,000 or $12,000 credit to buy electric vehicles. It makes no sense to me whatsoever,” Manchin said. “When we can’t produce enough product for the people that want it and we’re still going to pay them to take it — it’s absolutely ludicrous in my mind.

Automakers are investing tens of billions of dollars to ramp up EV production and some fear the window is closing for Congress to extend EV tax credits given Republicans may retake control of one or both houses of Congress next year.

Last year, many Democrats in Congress and President Joe Biden proposed boosting EV tax credits to up to $12,500 — including a $4,500 incentive for union-made, US assembled vehicles. Manchin earlier opposed the union-only incentive.

Biden also backed a 30% credit for commercial electric vehicles and a $4,000 used EV tax credit and making the current credit refundable at the point of sale.

Biden also wants to end the current practice of phasing out automakers’ tax credits after they hit 200,000 electric vehicles sold, which would make Tesla Inc, the largest maker of electric vehicles, eligible again for the current $7,500 credit.

Tax credits for General Motors vehicles expired in April 2020 and Toyota Motor said this month it expected its credits would expire by the end of 2022 after it hits the cap. Ford Motor sold nearly 160,000 EVs through the end of 2021 and could hit the cap this year.

(Reporting by David Shepardson; Editing by Alexandra Hudson)

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