The US House of Representatives passed the $1.9 trillion “Build Back Better” legislation early this morning, following a lengthy session that included a record-setting speech from House Minority Leader Kevin McCarthy. The Build Back Better bill, which includes robust changes to federal tax credits for EVs, will now face the Senate, where two vital Democrats have already shared that they are undecided on their vote.

The whirlwind ride that is the Build Back Better Act rolls on, following its passage through the House this morning. Dems cheered House Majority Leader Nancy Pelosi as the vote surpassed 218, enough to ensure passage from the initial half of Congress.

The final vote narrowly landed at 220-213. Its passage represents a prudent victory for the Biden administration, as it looks to get the second and larger portion of its long-touted climate change legislation into law.

A couple of weeks ago, following Congress’ passage of the $1.2 trillion infrastructure bill, we reported that the Build Back Better Act has been folded into the larger legislation and faced concern from Moderates in the House demanding an analysis from the Congressional Budget Office (CBO).

Today’s vote came off the heels of the released CBO score, estimating the bill would increase the national deficit by $367 billion between 2022-2031. Meanwhile, the White House anticipated this sort of score, and tried to get an early jump on it by speaking with Moderate House Dems.

According to CNN, The Biden administration is pointing out that the US Treasury estimates that tighter IRS enforcement would increase national revenues by up to $400 billion, and the Build Back Better bill could essentially pay for itself.

Time will tell how much deficit (if any) the $1.9 trillion bill brings, but it will first need to face a Senate that is already speaking about changes.

Build Back Better Act and EV tax credit proceeds to US Senate

Nice work by the House, but now it’s the Senate’s turn, and it will take some convincing (and some inevitable changes) to get the Build Back Better Act into law.

Senate Majority Leader Chuck Schumer said he wants to achieve passage before Christmas. The Senate better get moving as the bill will surely require negotiations, even amongst Democratic Senators.

Santa’s #1 coal supplier, West Virginia Senator Joe Manchin, has yet to give his support, and is joined by Senator Kyrsten Sinema who is also undecided. Vermont Independent and Elon Musk fixation Senator Bernie Sanders has also expressed that he’d like to see changes to the bill before passage, focusing particularly on fair share taxes for the ultra-wealthy.

Dems still hold a narrow majority with the Independent Senator caucuses, but if just one Democratic Senator defects, it could derail the Build Back Better bill’s passage, at least before the new year.

Any changes proposed and passed by the Senate will send the legislation back to the House for a final vote, before the President signs it into law.

A lot rides on this bill pertaining to health care, tax credits for children, and revamped tax credits for EV automakers. Here are the current terms of the Build Back Better Act that pertain to the EV market.

There has been much debate about the additional $4,500 for local manufacturing and union labor up to this point. Take this statement from Jennifer Safavian, President and CEO Autos Drive America for example:

We are disappointed that the House passed Build Back Better Act includes a discriminatory electric vehicle tax incentive that provides a $4,500 UAW bonus that harms American autoworkers who have chosen not to unionize.  It also creates an overly complex analysis that consumers must work through to determine which vehicles are eligible, only to find that most EVs won’t receive the full credit. With the growing number of stakeholders raising concerns about this legislation, 25 Ambassadors to the United States and 11 U.S. Governors, we are not the only ones who think this is bad policy. We urge the Senate not to play politics with American auto workers, consumers, and the environment and instead focus on policies to build a robust and equitable U.S. market for all EVs.

Automakers like Volkswagen have expressed similar distaste for the proposed legislation. Expect that to be a topic thoroughly discussed in the Senate. Note, these terms have not been passed into law and most certainly could change.

  • Federal tax credit for EVs jumps from $7,500 to $12,500
    • Keep the $7,500 incentive for new electric cars for five years
    • Add an additional $4,500 for EVs assembled in the US using union labor
    • Another $500 for EVs using battery packs with 50% of components (including cells) made in the US
  • Zero-emission vans, SUVs, and trucks with MSRPs up to $80,000 qualify (increased from previous policy)
  • Electric sedans priced up to $55,000 MSRP qualify (stays the same)
  • The full EV tax credit will be available to individuals reporting adjusted gross incomes of $250,000 or less, $500,000 for joint filers (decreased from $400,000 for individuals/$800,000 for joint filers currently in place)
  • Eliminates tax credit cap after automakers hit 200,000 EVs sold, making GM and Tesla once again eligible

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