The existential crisis facing the Canadian auto industry may finally be over.
Democratic U.S. Senators Chuck Schumer and Senator Joe Manchin have agreed to propose scrapping a tax credit scheme that favored electric vehicles made in the United States.
Instead, the Senate Majority Leader and West Virginia moderate is proposing an amendment to US President Joe Biden’s Climate and Health Bill that would expand appropriations to include all of North America.
The amendment includes an extension of the US$7,500 consumer credit that was previously limited to US-made “clean vehicles,” which include battery electrics, plug-in hybrids and hydrogen fuel cells.
There is also a new $4,500 credit for used electric vehicles and a new $10 billion investment tax credit for building clean technology manufacturing facilities, according to a bureau summary. by Schumer.
To be eligible for the credits, the amendment would also require vehicle batteries to contain a certain percentage of materials from U.S. free trade partners and cap the retail price at $55,000 for new cars and $80,000. dollars for pickups, SUVs and vans.
Canadian International Trade Minister Mary Ng welcomed the change.
“This is good news for Canadian workers, jobs and our manufacturing industry,” she said in a statement.
“As the bill moves through Congress, we will continue to champion the importance of keeping these supply chains integrated and creating a greener, more prosperous future for North America.”
To qualify for the credit, consumers must not earn more than $150,000 if claiming the tax credit individually or $300,000 for joint filers. For used cars, the eligibility limit is $75,000 and $150,000, respectively.
Senate vote expected next week
The move was expected to please automakers such as General Motors, Tesla and Toyota, which have expanded their electric vehicle manufacturing and criticized the Buy American bill when it was first proposed last year.
Under the amendment, the credit will no longer be limited to manufacturers with sales of 200,000 electric vehicles or less.
The law is still far from being passed. Schumer said the US Senate is expected to vote on the bill next week, and then it will go to the Democratic-controlled House of Representatives.
This is sure to infuriate Senate Republicans, who will be reluctant to give the Democrats a legislative victory with the midterm elections looming in November.
Manchin is a crucial vote in the equally divided Senate, but the bill will still need 60 votes to avoid Republican stonewalling tactics.
Averted trade war over mad 🇺🇸 EV tax credit that illegally excluded vehicles made by 🇨🇦.
NDP Senate package with @Sen_JoeManchin NOW support says the credit applies to vehicles that are “made in North America.”
Many of us have spent A LOT of time on this. 💪 https://t.co/GMVUKFpf1i pic.twitter.com/ze6h2jgr0w
The bill also includes $2 billion in cash grants to retool existing auto manufacturing facilities “to manufacture clean vehicles, ensuring auto manufacturing jobs stay in the communities that depend on them.”
If it becomes law, it will additionally provide up to $20 billion in loans to build new clean vehicle manufacturing facilities and $30 billion for additional production tax credits “to accelerate the American manufacturing of solar panels, wind turbines, batteries and critical mineral processing”.