The Democrats' New Inflation Bill Includes Tax Credits for Electric Vehicles That Don't Exist
Even Democrats are criticizing the bill's unrealistic expectations.
After a marathon overnight session, the Senate passed the Inflation Reduction Act on a party-line vote Sunday. The bill apportions $740 billion for a grab bag of Democratic spending priorities in the name of combating inflation. One item on the list: tax credits for purchasing electric vehicles (EVs).
There's a problem: No cars exist that qualify for the credits.
Currently, new electric vehicles (either hybrid or all-electric) qualify for a rebate of up to $7,500, limited to 200,000 rebates per manufacturer; Tesla and General Motors have hit the cap and no longer qualify. The new bill removes the cap, and it also introduces a $4,000 credit that can be applied to used EVs.
The bill also puts restrictions on which EVs can qualify. Starting in 2024, an EV that qualifies for the full rebate amount must source at least 40 percent of its battery's components—including minerals such as lithium, cobalt, manganese, and graphite—from either the U.S. or a country with which the U.S. has a trade agreement. Also starting in 2024, no minerals can be sourced from a "foreign entity of concern," such as China.
The stipulation was part of a compromise with Sen. Joe Manchin (D–W.Va.), whose support was critical to the bill's passage. Manchin insisted that the bill take a hard line on China, telling reporters: "I don't believe that we should be building a transportation mode on the backs of foreign supply chains. I'm not going to do it."
But 60–80 percent of EV batteries' mineral ingredients are controlled by China. That country currently produces 76 percent of the world's lithium-ion batteries, while the U.S. produces only 8 percent. Despite ambitious plans to scale up, the U.S. and Europe together will likely account for only about a quarter of total global production of EV component minerals by 2030.
Not that any of this was news: Last week, Reuters reported that multiple automakers were complaining about the feasibility of meeting the bill's timeline. Sen. Debbie Stabenow (D–Mich.), whose state includes the U.S. auto capital of Detroit, called it "a very cumbersome, unworkable credit once the full restrictions set in."
Last year, an earlier version of President Joe Biden's Build Back Better bill included a provision that would increase the EV tax credit by $5,000 if the vehicle and battery were both manufactured in a unionized U.S. factory. At the time, only the Chevrolet Bolt qualified for the extra incentive. Now, not one single vehicle qualifies for the full rebate.
Politico suggests that the government can simply get around these strictures by issuing waivers, much as it has done for steel tariffs. In practice, steel waivers incentivized cronyism, with Washington bureaucrats picking and choosing which companies received waivers and which did not. And if a law has problems, surely the best place to deal with that is in the text of the legislation itself, not an unstated hope that the administrative state will fix the issues when they arise.
If two bills in two years have proposed electric vehicle rebate programs that would apply to virtually no cars, Democrats' electric vehicle plans are clearly at odds with reality.
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Just wait until the republicans realize they can object to every single project for building charging stations.
They should require that all charging stations be powered by solar or wind only. No grid connections allowed, build them all next to a bird killing wind farm or land covering solar farm.
The republicans won’t do anything.
Well, of course not; why do you think I am ‘longing’?
They had better, or it will fall to the people to put the democrats down.
The smartest thing to do would be to invest in hydrogen versus battery-powered. The commercial trucking industry is focusing a lot of attention on hydrogen, so aligning to that solution may remove some challenges in providing battery-powered vehicles.
Can’t store hydrogen effectively, yet.
The last energy crisis caused research on hydrogen and it can be stored in a metal hydride. Only about 15psi and has cooling heating capability. Very nice.
Hyrogen’s problem is energy volume; it is pathetic. Airliners, for instance, would need several times the size of current fuel tanks, and they would all have to be cryogenically insulated.
How big are these metal hydride tanks to get even 2-300 mile range?
Airliners, for instance, would need several times the size of current fuel tanks, and they would all have to be cryogenically insulated.
Steampunk enthusiasts everywhere just got a giant boner. The age of the dirigible is back, baby!
So how much does that cost/ weigh. Yes, it exists. Is it practical?
My dad once bought a Liquid Natural gas tractor. He was going to save money with the low cost fuel ovrr gas and diesel. He spent so much time driving back and forth to fill up the tractor from out in the fields that he sold it for a gas tractor. 40 years ago. Diesel trucks were going to do this recently. Same issue, energy density.
But hydrogen does have potential, its current best storage container is either too heavy or too expensive.
Oil, gas, and coal are all great stores of hydrogen. And seem to last forever.
Google ‘hydrogen embrittlement.’ There is a huge engineering problem moving hydrogen to the point where it is used to fuel a vehicle. Pipes will not work long term.
Likely the same is true of any metallic storage container, especially at elevated pressures.
Toyota is selling a hydrogen vehicle (the Mirai) with hydrogen filling stations in the US. I don’t know how far that technology will go to other manufacturers by 2024, and it still needs a battery which doesn’t get around the China problem, but I 100% agree that hydrogen — which basically self-charges the battery — is a far better long term solution than pure EVs.
Hydrogen cells have a well known issue, and that issue is that they are highly explosive. If you think car accidents are bad now, wait until you’re driving an actual bomb. Not to mention you can use them as bombs.
not to mention hydrogen cars spew water vapor no big dal till are freeways are covered with ice on those cold mid west winter morns. wrecks a plenty , at least the plant life will thrive along roadways that will then have to be cut down. owe and lets not forget the hummidity that many place never experienced before.
Or just tell the enviro-wackjobs that H2O is a greenhouse gas and watch them flip their lids even though most of the surface of the planet is water.
Don’t call it water or H2O, call it “dihydrogen monoxide” and mention how many people die from dihydrogen monoxide poisoning (aka drowning) each year.
You may have encountered the very old treatsie laying out the purported problems dihydrogen monoxide and that the government should ban it. Very, very funny.
A new one I saw was “For those who have become dependent on dihydrogen monoxide, withdrawal means certain death.”
Search for “ban dihydrogen monoxide”.
Water vapor goes into the air. It might increase humidity enough to increase icing, but from where is that hydrogen coming. From water. I doubt there will be great change in total humidity unless you transport hydrogen absurdly long distances.
Highly explosive is an overstatement. It burns but unless in a container partly filled with oxygen, it does not EXPLODE. The Hindenberg burned, it did not explode. Hydrogen as fuel has some serious problems but explosion is not one.
>>Even Democrats are criticizing the bill’s unrealistic expectations.
oooooh criti-CI-zing! they do this shit and get away with it and laugh at the middle class because the worst anyone does to fight back is criticize … post-vote
But 60–80 percent of EV batteries’ mineral ingredients are controlled by China. That country currently produces 76 percent of the world’s lithium-ion batteries, while the U.S. produces only 8 percent. Despite ambitious plans to scale up, the U.S. and Europe together will likely account for only about a quarter of total global production of EV component minerals by 2030.
Now… just imagine getting into a serious military standoff with China, and then we sanction China by banning imports of the very thing we’re dependent on.
Remind you of anything?
It’s only going to get worse.
https://www.cnn.com/2021/08/18/business/afghanistan-lithium-rare-earths-mining/index.html
If only we could somehow transform Afghanistan into a liberal democracy surely well connected businesses could help them exploit their wealth. I’m thinking an invasion might be the ticket here.
And what well known politician’s son was compensated well for securing mineral rights for Communist China?
My understanding is that this is very much a self-created situation as well. Basically banning mining in places other than China for environmental reasons. No one country did it, but many acted together leading to a weird supply crunch.
I went and looked this up:
https://investingnews.com/daily/resource-investing/battery-metals-investing/lithium-investing/lithium-reserves-country/
So, there are other big countries including Chile. Might not be bad to figure out some way to enable investment there, and in the US. I bet that can be done without straight subsidy too. Though in the US, I fear the tendency for the Federal Government to flip-flop has significantly injured our ability to get investments in infrastructure.
And attempts to obtain those minerals domestically (and yes we do have them) are currently stopped by Democrat Enviro-wackos because they are opposed to all mining operations.
If the people at Reason were true libertarians they would ignore the details and analysis, and simply there should be no subsidies at all. A one sentence article. That’s all they need.
It could be at least mentioned. That’s all anyone is asking.
Shush. Sarc’s emoting.
If only we could harness the power of his whining.
I think the best way to view Reason’s reporting is that they are trying to reach the libertarian-curious out there. Not the hard core fully converted, we are already part of ‘the choir’ that Reason doesn’t have to preach to anymore.
So a non-libertarian would likely scoff at the idea that there shouldn’t be government subsidies at all. “How would people be able to afford these expensive cars then????” So an article like this is trying to reach a person who may not be ideologically opposed to subsidies, but is still persuadable that this particular one is a bad idea.
How about the Pedo-curious? It seems to have worked with you
“Everyone who disagrees with me is a pedo. LOLZ”.
So persuasive.
Except he never said everyone. He is talking about the guy defending teaching sexual activities to children.
Pedo Jeffy has aggressively displayed his pro pedophile advocacy across multiple issues here at Reason.
“we”. LOL
Politico suggests that the government can simply get around these strictures by issuing waivers, much as it has done for steel tariffs.
Politico still acting as a consultant to the Democrats?
remember the 14 minutes Politico was almost normal?
Is that cumulative, a second here and there since their founding?
no like the first 14 minutes of their existence they posted a couple of mid-road things
No shit. Let’s pass a misleadingly named law with conditions that we already have a workaround to ignore before it even passes the other chamber. What a crock of dishonest shit.
“There’s a problem: No cars exist that qualify for the credits.”
That’s not a problem. That’s a feature.
These are INCENTIVES. They are not EXPECTATIONS or REQUIREMENTS. This isn’t CAFE.
Oh, look at this story from March!
https://www.mining.com/web/granholm-manchin-unveil-us-lithium-battery-development-plan/
As part of the initiative, Energy Department officials, representatives of the AFL-CIO and the United Mine Workers of America and executives of Sparkz Inc., a battery manufacturer that is developing a cobalt-free battery technology in Knoxville, Tenn., met Friday at the West Virginia Regional Technology Park in South Charleston, West Virginia.
The company said in a statement after the meeting it plans to begin construction in 2022 of a “Gigafactory” in West Virginia to commercialize their zero-cobalt battery that will initially employ 350 workers.
“While I remain concerned about our dependence on China and other foreign countries for key parts of the lithium-ion battery supply chain, engaging our strong and capable workforce to manufacture batteries domestically is a critical step toward reducing our reliance on other countries and ensuring we are able to maintain our energy security,” Manchin said in a statement. “I look forward to seeing this initiative grow, and we will continue to work closely together to ensure we can onshore the rest of the battery supply chain.”
steel waivers incentivized cronyism, with Washington bureaucrats picking and choosing which companies received waivers and which did not.
This is a feature, not a bug.
Right, how else do you ensure your #1 priority of No Mean Tweets gets accomplished without something like this? Some EV mogul might tweet all kinds of stuff you don’t like, and that’s no way to save the environment.
It also makes insider trading more effective.
Just because something doesn’t exist is no reason not to subsidize it!
Right! We can employ a lot of government employees who work at agencies that must be staffed, in offices that must be built or rented, with equipment that must be bought, etc. so that we can properly subsidize these non-existent cars.
I think the government owes me reparations for never providing the flying car I was promised half a century ago. And one of those people mover things to get me from the bedroom to my recliner in the family room.
So, a win for libertarians?
The entire Green agenda is at odds with reality. Humans do not cause any measurable global warming. Solar and wind destabilize power grids. And if the greenies actually wanted a non-polluting stable power source, or actually believed their alarmunist propaganda about the end of the world, they’d go nuclear.
Democrats’
electric vehicle plansare clearly at odds with reality.FTFY
Their numbers need to be reduced until they’re at a more manageable total.
You also have to love the special kind of stupid it takes to offer a $12K subsidy on something that has a waiting list of buyers.
probably an entire “Negotiating: Pitfalls” section of amazon books
The Postmodern Art of the Deal
These cars will hopefully cure some of the greens from their obsession. Some will find that the limitations/actual costs of their dream electric mobile will not be the panacea they were looking for. Most of it is virtue signaling now.
“….If it moves, tax it. If it keeps moving, regulate it. And if it doesn’t exist, subsidize it….” Joe Reagan Biden.
I seem to recall 100% of Chevy “Volts” being recalled and destroyed because they like to catch fire and GM wasn’t going to fix them. Maybe GM rushed a shit product to soak up free government money?
Tyler Durden did the math on that one
I dont know if they still do but they used to have the government on their board, the Obama admin put them there as part of the 2008 bailouts.
It would make perfect sense for the only car to qualify to be 1. produced by GM and 2. currently all under recall.
That’s our government in a nutshell
Breaking windows all the way to the bank!
Yeah; Print up another TRILLION fake-dollars…
That’ll fix inflation…
Could these representatives get any more F’En stupid??
unfortunately they probably can, in the past I always had that thought and then they always came up with something else even more stupid. GEEZE!
They can go full on brain dead.
The real problem is the rebates exist in the first place, not that they only apply to non-existent cars
this is a feature, not a bug. it means less giveaways from the taxpayer. and evs are retarded in every way.
So politicians get credit for being green without spending any of our money. Brilliant! I approve.
Did I read this right? Does it really say that Joe Manchin tricked the rest of the Democrats into ending e-car subsidies for several years?
Good job, Joe.
Not nearly as good as tricking his fellow democrat legislators into following him into a room where he would trap them, spray them down with bacon grease, and proceed to release a few hundred rabid raccoons on the greased up congressmen.
I like the cut of your jib Ted.
The New Socialism is magic: give a few thousand dollars in incentives, and “the market” will magically provide infinite green energy and flying electric cars! — What Democrats actually believe.
“Tax credit UP to $7500”.
When I read that , my bullshit meter flashed red. What that really means is you have to wait until you file your tax return to see IF you get a tax credit and how much it is .
So they will subsidize electric cars with so many restrictions that it will take another army of government workers to verify where all the parts are sourced.
Then the reality, all those cars run mostly on fossil fuels that produce the electricity they need. Duh