U.S. Senate Republicans on Friday released an updated tax and budget bill proposing the early termination of key federal electric vehicle (EV) tax credits, including the $7,500 incentive for new EVs and the $4,000 credit for used ones. Under the revised legislation, both incentives would end on September 30, potentially reshaping the EV market ahead of the 2024 election.
The bill marks a sharp departure from the Biden administrationās EV-focused climate policy. A previous version of the Senate proposal allowed the credits to expire at later intervalsā180 days after enactment for new vehicles and 90 days for used onesāwhile immediately ending benefits for leased EVs that did not meet North American assembly and content requirements.
The House version of the bill would preserve the $7,500 credit for new EVs until the end of 2025 and until 2026 for automakers that have not yet sold 200,000 eligible vehicles. That contrast sets the stage for negotiations as the legislation advances through Congress.
The Senate proposal would also roll back fuel economy enforcement by eliminating fines for automakers that fail to meet Corporate Average Fuel Economy (CAFE) standards. Supporters say the move would ease regulatory pressure on companies producing internal combustion vehicles. To encourage U.S.-based manufacturing, the bill introduces a temporary tax exemption on interest paid for car loans on domestically produced vehicles, though the benefit phases out for individuals earning over $100,000 annually.
A previously proposed clause requiring the U.S. Postal Service to abandon its electric vehicle fleet and charging infrastructure was dropped after the Senate parliamentarian ruled it ineligible. The USPS had warned that reversing its EV programācomprising Ford e-Transits and Next Generation Delivery Vehicles from Oshkosh Defenseāwould result in a $1.5 billion loss.
Earlier this month, former President Donald Trump signed a resolution blocking Californiaās plan to phase out gasoline-only vehicle sales by 2035, a policy that has been adopted by 11 other states representing roughly one-third of the U.S. auto market.
Source: Reuters