How environmentally friendly is the vehicle in question?
The American Council for an Energy-Efficient Economy reported that Biden’s Hummer EV “emits more per-mile carbon dioxide pollution when taking into consideration its electricity use than a gas-powered Chevy Malibu sedan.”
NPR reported certain issues with the scheme.
Only vehicles that cost less than $55,000, or less than $80,000 for trucks and SUVs qualify for the tax credit.
The average cost of an EV is roughly $66,000, which means few vehicles qualify for the scheme. Some vehicles listed on the IRS website as potentially eligible for credit actually fail to qualify because they are expensive.
Another problem is that there isn't an explicit definition regarding which vehicle is subject to that $55,000 cap and which vehicle is subject to a $80,000 cap.
The IRS states the categories are based on the criteria for fuel economy for gas-powered vehicles standards, but these classifications seem arbitrary and confusing.
There were other problems with the information on the IRS website.
The plug-in hybrid Ford Escape was listed as having an $80,000 price cap for more than a week before the cap was changed to $55,000. The Treasury Department claims the original price cap was a typo.
You would have hoped the content on the website was reviewed before publishing.
But then this is the Biden administration, blundering is its middle name.
There are other issues with the scheme.
The clean vehicle credit is a “non-refundable” tax credit, which means buyers only get the full benefit if they have an annual federal tax liability of at least $7,500, which seems odd.
Some of the tax credit rules took effect on Jan. 1. However, others rules related to battery minerals and other components are expected to take effect by March 2023.
Hence, many vehicles that currently qualify for the tax break may not after the rules take effect.
The scheme has income restrictions, too.
A maximum of $300,000 for a household, $150,000 for an individual, or $225,000 for a head of household. The income limit is adjusted gross (AGI) income, not the total income. AGI is the gross income minus adjustments to income.
Experts say that these restrictions unnecessarily disqualify a significant potential number of buyers.
Finally, the qualifying EV must have undergone final assembly in North America to qualify for the scheme. The claim is they want to boost U.S. manufacturing.
If that was the case, why didn't they restrict the location of assembly to the U.S. rather than North America which includes the Canada, Mexico, etc.?
If foreign players are indeed being allowed, why not allow them all?
Next car I buy will be a ten year old Toyota. That’s all I can afford.