Senate push for expansive electric-vehicle incentives in $3.5T budget could hit bumps

The $3.5 trillion budget framework passed by the Senate early Wednesday opens the door to a vast new effort to try to make electric vehicles more affordable for American consumers.

That key Biden administration priority didn’t make it into the Senate’s bipartisan infrastructure bill but is backed by congressional Democrats, including House members who say they will not vote for the infrastructure bill without bolder action to reduce the carbon emissions responsible for warming the planet.

Sen. Debbie Stabenow, D-Mich.—who represents a state President Joe Biden visited in May to test drive Ford’s new all-electric F-150 Lighting truck—has pushed for tax credits of up to $12,500 per vehicle. Senate Majority Leader Charles Schumer, D-N.Y., has called for rebates when drivers buy electric vehicles, part of an effort he once argued should be backed by hundreds of billions of dollars in federal funds.

But the political path remains strewn with potential pitfalls, as demonstrated by the debate over a symbolic amendment on electric-vehicle incentives late Tuesday during the Senate’s budget debate.

The nonbinding amendment from Sen. Deb Fischer, R-Neb., to bar electric-vehicle tax credits for people making more than $100,000 a year—or for vehicles that cost more than $40,000—passed with three Democrats joining Republicans. Arizona Democrats Kyrsten Sinema and Mark Kelly voted with Joe Manchin III, D-W.Va., in supporting the amendment.

“My colleagues on the other side of the aisle like to say wealthy Americans should pay their fair share in taxes,” Fischer said. “Yet they want to expand a tax credit to disproportionately benefit even more people with six-figure salaries.”

Stabenow said the amendment would undercut purchases by farmers, families and small businesses.

“This amendment is just plain anti-pickup truck,” Stabenow said.

Ford sold almost 800,000 F-series pickups last year, making them the best-selling vehicle in the United States, the company says. Turning one of those workhorse trucks into a zero-emissions standard-bearer was seen as a major move by Ford to sway customers on the benefits of electric vehicles. Beyond instant torque and nonexistent gasoline bills, executives have pointed to the electric truck’s ability to provide backup power to homes during a blackout.

The base model electric F-150 costs about $10,000 more than the gas-powered version.

The Senate dust-up Tuesday reflects long-standing disagreements on Capitol Hill over the benefits of financial incentives to spur the transition to electric vehicles, which make up about 2% of U.S. sales.

Transportation is the largest source of U.S. greenhouse gases, creating more than 1.9 billion metric tons of emissions each year. The president last week signed an executive order to spur federal efforts seeking to make half of all new vehicles sold in the United States electric or plug-in hybrids by 2030.

A document this week that outlines instructions for Senate committees—part of a budget process known as reconciliation, which would require only Democratic support—refers vaguely in one section to investments in “clean energy, manufacturing, and transportation tax incentives.”

Schumer said Wednesday that committees will spend several weeks hashing out details of legislation that would turn the $3.5 trillion package into policies to help address economic pressures that have caused a “sourness in the land.” The proposals will include child care and community college tuition as well as efforts by the Committee on Banking, Housing and Urban Affairs to promote community revitalization by addressing land use and making transit improvements. Senate Republicans have decried the scale of the package and many of its goals.

Supporters say they hope the Senate will provide a significant boost for electric vehicles.

President Biden hinted last week at the potential direction of Senate action at a White House appearance with executives of Ford, General Motors and Stellantis, the parent company of Chrysler.

He pointed to a bill backed by Stabenow and Sen. Ron Wyden, D-Ore., that advanced out of the Senate Finance Committee in May. Biden urged government, labor and industry officials to reclaim leadership in the electric-vehicle race with China.

“That means purchasing incentives for consumers to buy clean vehicles, union-made right here in America,” Biden said, noting that the bill backed by Stabenow and Wyden “provides $7,500 basic credit, $2,500 credit for vehicles made in America and an additional $2,500 credit for union-made vehicles.”

Reiterating his support for Stabenow’s efforts shortly after his remarks, the president told her, “I hope I didn’t get you in trouble by saying that.”

“You didn’t,” Stabenow responded. “You didn’t.”

In noting their “shared aspiration” to have 40% to 50% of U.S. new-car sales be electric vehicles or plug-in hybrids by 2030, the three automakers said that goal would be achievable only with purchase incentives, a large nationwide charging network and financial incentives to boost the nation’s manufacturing and supply chains.

Earlier this year, Biden called for spending $174 billion “to win the EV market,” including a nationwide network of 500,000 chargers, refurbished factories, electric school buses and mail trucks—as well as $100 billion of consumer rebates for electric vehicles.

Some of those priorities were included in the bipartisan infrastructure bill that passed the Senate on Tuesday, including billions for chargers. But the scale of the effort was drastically diminished in comparison with Biden’s earlier goals.

On Wednesday, 29 members of the House signed on to a letter calling on Schumer and House Speaker Nancy Pelosi, D-Calif., to “match or exceed” Biden’s original $174 billion electric-vehicle proposal, saying the Senate-passed infrastructure bill has an insufficient $10 billion to $13 billion of such funding.

The electric-vehicle industry employs more than 250,000 Americans and with the right investments would create more than 2 million jobs nationally in the coming decades, the House members wrote. Quickly deploying electric vehicles can get the United States about a quarter of the way toward meeting the Biden administration’s target of cutting greenhouse gas emissions by about 50 percent from 2005 levels by 2030, they wrote.

Without support for electric-vehicle manufacturing and infrastructure, they said, “competitors will increase their share of the domestic EV market at our expense. Missing this opportunity will put millions of new, good paying clean jobs at risk.”