What Are the New Electric Car Incentives for Buyers?

Posted on Aug 11, 2021 in Sustainable Living & Sustainable Lifestyle by Anh Speer, Ph.D. 0 Comments

A new proposal from President Joe Biden would make buying electric cars much more affordable, as well as fund infrastructure that supports use of electric cars.

One of the main ways to fight the greenhouse effect is to stop driving cars powered by fossil-based fuels. Of course, it requires buy-in from millions of people to make a difference. That’s why the government offers electric car incentives for buyers.

In recent years, those electric car incentives have taken the form of a tax rebate. Now, a new proposal from President Joe Biden would increase the amount of the rebate, giving people even more reasons to buy an EV. Environmental activists hope it’s the kind of proposal that will take the public’s interest in electric cars to another level.

The Current Electric Car Incentives for Buyers

The biggest incentive for EV buyers is the tax credit. Currently, you can get a tax credit of up to $7,500. The phrase “up to” is used because you don’t get a check from the government for $2,500 if your tax bill is only $5,000. You get a $7,500 rebate or the amount of tax bill, which ever is less.

Some cars are not eligible for the full rebate because of the size of the car’s battery. For example, the Toyota Prius Prime is only eligible for a $4,502 rebate, according to Edmund’s. Also, the incentives are phased out for car companies that sell more than 200,000 cars. That’s why buyers of Tesla and General Motors electric cars no longer get a rebate.

However, there are still many electric cars that qualify. The U.S. Department of Energy maintains a list.

The Electric Car Incentives in Biden’s Proposal

The new proposal from the White House on electric car incentives is currently making its way slowly through Congress. The proposal raises the amount of the rebate to $12,500 for qualifying cars. That means if you owe that much or less on your taxes, you will pay no taxes the year you buy an EV.

However, there are a couple of catches that might put a hitch in Biden’s plans.

The proposal calls for incentives only on cars made in the United States with union labor, which would disqualify both Tesla and Toyota. Both companies have already publicly opposed this part of the bill.
It also requires that the car use a U.S.-built battery to qualify for the full $12,500 incentive, something that would disqualify some automakers

As with the current credits, the new proposal only applies to buying a car, not leasing one. The bill also includes funding to build 500,000 EV charging stations across the country.

Why Are Electric Cars Important For The Environment?

Biden’s proposal is important because fossil fuel-powered vehicles are one of the major sources of pollution on the planet. Most scientists agree that they are a main contributor to global warming.

The federal government estimates that cars on the nation’s highways emit 1.6 billion tons of greenhouse gases (GHGs) every year. Most of this is in the form of carbon dioxide, a big contributor to global warming. Every gallon of gas a car uses creates about 20 units GHG, meaning that a car produces between six and nine tons of GHG every year.

Biden has said he wants 50 percent of all new vehicles in the country to be electric by 2030. He also has asked automakers to cut down on tailpipe emissions and increase the gas mileage for new vehicles through model year 2026.

His request is not binding, so it remains to be seen if automakers will adopt them. And the new proposal on electric car incentives must still get through Congress. However, both initiatives provide hope for those who want to see big changes in how governments promote sustainability.