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Making the bill even better, both of these incentives have “long sunsets.” Rather than being tied to just a few years, or, as is currently the case with vehicles, being limited to just the first few hundred thousand sales, these incentives would hang around until renewable energy and EVs were clearly dominating their respective markets. In the case of EVs, that would mean the incentives would only begin to phase out when more than 50% of passenger vehicle sales were fully electric.
For consumers looking at EVs, this would provide an immediate benefit in terms of three of the most popular electric models: Tesla’s Model 3 and Model Y, and GM’s Chevy Bolt. Both of these companies passed the 200,000 vehicle limit of the existing legislation several years ago and consumers no longer get a tax credit when purchasing these vehicles. Under the new legislation, this would be restored. In fact, consumers would now get $10,000 credits on both Tesla vehicles, and $12,500 on the Bolt. (Tesla workers are not unionized.) Under the bill, those buying the new Ford F-150 Lightning pickup would also see a potential $12,500 discount, which would make that truck significantly cheaper than its gas-powered counterpart. (The Ford Mustang Mach-E would get only the base $7,500 rebate, as it is built in Mexico.)
It’s worth noting that as with the current legislation, these are tax credits, not tax deductions. They come straight off the top of what a taxpayer has to shell out, even if they chose to use standard deductions rather than itemizing a return. However, they are limited in the sense that you can’t get back more than you owed. So if someone purchased an EV and in that year owed less than $12,500 in taxes, they would get up to what they owed as a rebate—but no more.
Considering the number of new EVs on the way and the number of auto manufacturers that have announced they intend to be all electric by the end of the decade, these incentives may not last as long as some would expect. In fact, they could easily begin to phase out before 2030. But by that time, they would have an impressive effect on the fleet moving along America’s highways.
One limit that the new legislation contains not seen in the past is that luxury vehicles—defined here at those costing over $80,000—would not be eligible for a rebate. So those shelling out over $100,000 for a first-edition electric Hummer or a Tesla Model S Plaid are on their own.
The Clear Energy for America Act has similar guidelines for phasing out payments on electric production. Rather than limiting those payments to a number of years or providing a cutoff in terms of production, power sector credits would be phased out over a five-year period only after the emissions from electrical generation fall at least 75% from levels measured this year.
The Clean Energy for America Act isn’t perfect. It would be better if the payments on EVs were in the form of immediate rebates to consumers at the time of purchase rather than requiring buyers to wait until the next tax season to see their credits. Not only does this make the situation more confusing, but it provides more benefits to purchasers with higher incomes who can fully utilize the credit.
Even so, this bill represents a tremendous advance. The Union of Concerned Scientists (UCS) has called the bill an essential step in both creating clean energy jobs, and reducing America’s emissions. In fact, when compared with other proposed plans, the UCS concluded that the Clean Energy for America Act “would achieve the greatest increase in U.S. renewable energy capacity and the deepest reductions in both carbon emissions and toxic air pollutants.”
Which is why it’s already being called out by oil and gas companies—and their Republican representatives—as a threat to those industries. It is.
The bill could pass the Senate on a 50-50 vote … but that means getting every Democrat on board.
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