Thanks to a bill from the Biden administration, another 400,000 Teslas sold in the United States are poised to obtain a tax credit worth $7,000. A variety of initiatives aimed at promoting sustainable technology are included in the bill, called the Growing Renewable Energy and Efficiency Now (GREEN) Act.
Under the GREEN Act, after the first 200,000 EVs are sold, the electric vehicle credit limit for manufacturers will be expanded to 600,000 vehicles, while the tax credit will be $7,000 per vehicle. Considering that Tesla and GM have already reached the 200,000-vehicle mark, a tax credit of $7,000 will be earned by 400,000 more customers in the United States. This should make Tesla’s electric cars even more achievable, with the Model 3, the tax credit in place being effectively priced below $30,000.
Following is the GREEN Act’s section on electric vehicles and the extended US incentive.
“The bill also extends existing tax incentives available for the sale of electric vehicles. The bill increases the electric vehicle credit cap for manufacturers to 600,000 vehicles, but reduces the credit by $500 after the first 200,000 vehicles sold. This would replace the current phaseout period that begins with 200,000 vehicles sold, with a phaseout period that instead begins during the second calendar quarter after the 600,000-vehicle threshold is reached.
“At the start of the new phaseout period created under the bill, the credit is reduced by 50 percent for one calendar quarter and subsequently ends. For manufacturers that already passed the 200,000 threshold before the enactment of the bill, the number of vehicles sold in between 200,000 and those sold on the date of enactment are excluded in determining when the 600,000 threshold is reached.”
Not only does the GREEN Act concentrate on electric cars, either. The bill also provides a five-year Solar Investment Tax Credit (ITC) extension, which plays a major role in the country’s adoption of solar systems. A review of the plan states that by the end of 2025, the ITC will be expanded by 30 percent, then phased down to 26 percent in 2026, 22 percent in 2027 and 10 percent thereafter. This is something on which Tesla might also capitalize, given the energy sector of the firm.
“The bill also extends the investment tax credit (ITC) for solar energy property at 30 percent through 2025, which phases down to 26 percent in 2026, 22 percent in 2027, and 10 percent thereafter. The bill uses the same phaseout timeline and percentages for geothermal energy property.”
Granted, before it could be completely enforced, the GREEN Act also has to go through a legislative process. That being said, the odds of the bill actually being introduced seem to be pretty high with the Democrats in control of the Senate, the House, and the White House.
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