The extension of the electric vehicle tax credit in the energy and health care compromise reached by Senate Democrats is good news for the auto industry as it undertakes a profound transformation in how its products are made, powered and used.
But the plan includes a complicated set of limitations designed to optimize the outcomes. Let's hope they don't smother the chance to steer the industry's change.
I have little doubt that the intentions are good. The limits aim to address a major source of global warming without giving buckets of taxpayer dollars to rich folks who don't need it and to Chinese mining and tech companies. But make no mistake: It's going to be complicated, it could be costly, and it's going to reshape the EV industry as we know it today.
Among the 10 bestselling EVs in America this year, at least six would not be eligible for the new credit. The Hyundai Ioniq 5, Kia EV6, Kia Niro and Polestar 2 would all be excluded from the federal incentive because they aren't made in North America. And Tesla's Model S and Model X are clearly too expensive.
Another iffy one is the No. 2 seller: Tesla's Model 3. Recent price increases have put the Model 3 Long Range over the $55,000 price limit on electric sedans to qualify, though the entry-level rear-wheel-drive Model 3 still starts at $46,990, according to a recent story on Electrek.
(It really isn't clear why there's a higher price allowance for SUVs under this bill, except I guess to be nice to people who want one. Ultimately, it's a policy that discourages the use of the most efficient design.)
(And for what it's worth, the bill doesn't define an SUV. If the regulators who have to sort out the details of this proposal follow the Department of Energy/EPA classifications in the model year 2022 Fuel Economy Guide, there are no crossovers and precious few wagons. The Model Y, Volkswagen ID4, Ford Mustang Mach-E, Hyundai Kona and even the Volvo C40 Recharge are all classified as small SUVs.)