Tax Credit Changes in new bill [LOCKED DUE TO POLITICS & ARGUING]

[electruck]

https://www.chicagobusiness.com/government/congress-climate-bill-would-hurt-rivian-company-says

Rivian argues the Senate climate bill is stacked in archrivals' favor
Greg Hinz

3-4 minutes


Illinois’ biggest electric vehicle producer is complaining that pending federal legislation intended to incentivize people to buy electric cars and trucks actually would hurt it, putting it at a competitive disadvantage.
In a statement and an interview, James Chen, vice president of public policy for Rivian, said the pending climate change bill, the result of a political deal between Senate Majority Leader Chuck Schumer and Sen. Joe Manchin, D-W.Va., would give most breaks to other producers like Tesla and General Motors that have had longer to ramp up production or do some manufacturing overseas.
While Rivian applauds the intention of the pending bill, “as currently drafted, this legislation will pull the rug out from consumers considering purchase of an American-made electric vehicle,” said Chen, whose company employs roughly 6,000 workers at an assembly plant in downstate Normal. Though the company last week announced it was laying off 50 nonmanufacturing workers at the plant, Rivian still plans to hire more for manufacturing this year in Normal.
“The final package must extend the transition period to provide consumer choice and protect good-paying manufacturing jobs here at home,” he added.
At issue is a $7,500 per vehicle tax credit the federal government now offers those who purchase electric vehicles. The state of Illinois began offering a credit of up to $4,000, so the combined incentives give buyers a real reason to go electric.
Under existing law, the credit is available for the first 200,000 vehicles produced by any one manufacturer. Under the pending bill, the 200,000 cap would go away. But instead, the incentive would apply only to vehicles priced at under $80,000, including related charges—and the income of a purchaser could be no more than $150,000 a year, twice that for a couple.
Those provisions may be intended to quiet criticism that incentives are going to wealthy people who don’t need them. But since Rivian is just ramping up production, its costs are higher than Tesla and other companies that have been at this longer, Chen asserted.
As a result, “nearly all of our vehicles would be ineligible for incentives,” Chen said. The company is not even planning to offer a lower-priced model until 2025, he said.
Above and beyond that, all of Rivian’s production is in America, with a second assembly plant planned near Atlanta, Chen said. But the pending legislation just looks at the sales price. “It favors manufacturers who can come in at lower cost” because of foreign production.
Rivian has been in contact with Senate leadership and senators from states in which it has interests—Illinois, Michigan, California and Georgia—to see if the pending bill can be amended to allow startup companies such as Rivian to use the old rules during a transition period.
Illinois Democratic Sens. Dick Durbin and Tammy Duckworth did not immediately respond to requests for comment.
The pending bill overall offers huge incentives not only for electric vehicles but solar, wind and other noncarbon energy producers. But it also would mandate new federal leases for offshore oil drilling and offer new incentives for conventional energy producers who store carbon.

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[TXR1S]

https://www.bloomberg.com/news/arti...-obscure-rule-as-weapon-against-spending-bill

One paragraph form this article:

A revision that requires automakers to use increasing amounts of battery components made in North America to get access to the full $7,500 vehicle consumer tax credit could be ripe for a Byrd rule challenge, said Bill Hoagland, a former Republican budget director in the Senate now with the Bipartisan Policy Center.

Google title in incognito to get around paywall:

GOP Plans to Deploy Obscure Rule as Weapon Against Spending Bill

 

[Gshenderson]

https://www.chicagobusiness.com/government/congress-climate-bill-would-hurt-rivian-company-says

They aren’t wrong. It’s actually stacked in the favor of companies with better lobbying muscle, but they are one and the same.

 

[Gshenderson]

"No. There is another"

Kyrsten Sinema may still save us from the Spend and tax side...

As opposed to the spend even more while lowering taxes side?

 

[mkg3]

As opposed to the spend even more while lowering taxes side?

No. Stop spending. Don't raise taxes to fund things we don't need.

 

[jimrichard]

I have to wonder how much the makers of the bill know about EV's and their pricing ect. Did they really research what an EV truck costs or just come up with a number that sounded reasonable. Did they research Rivian or even the Lightening before coming up with this cap ? Trucks are very expensive in any form these days and the $80K limit is a little low. Also the car limit would likey eliminate most decent evs on the market including the Hyundai Ionic 5 and Kia EV6 as well as the Genesis GV60 all good new EV's. What would be left cap wise ? Chevy Bolt, NIssan Leaf, Toyota Prius plugin and other new entry level ev's ? Change's are coming lets just hope they make sense when something is finally passed.

 

[electruck]

I have to wonder how much the makers of the bill know about EV's and their pricing ect. Did they really research what an EV truck costs or just come up with a number that sounded reasonable. Did they research Rivian or even the Lightening before coming up with this cap ? Trucks are very expensive in any form these days and the $80K limit is a little low. Also the car limit would likey eliminate most decent evs on the market including the Hyundai Ionic 5 and Kia EV6 as well as the Genesis GV60 all good new EV's. What would be left cap wise ? Chevy Bolt, NIssan Leaf, Toyota Prius plugin and other new entry level ev's ? Change's are coming lets just hope they make sense when something is finally passed.

I suspect the limits have virtually nothing to do with the price of vehicles and more the perception of "wealth" and who should and shouldn't be subsidized per the court of public opinion.

However, a new automobile company pretty much has to launch with high dollar, high margin vehicles in order to grow - low price, low margin offerings would require high volume in order to generate enough profits to remain viable, and high volume production is something that a startup is incapable of right out of the gate. This is why Rivian is arguing that the current draft of the bill works against them and favors more established manufacturers.

 

[BullWink181]

Has nobody thought of a rewrite that would work for startups but also incentivize production of vehicles at price points that are affordable? Could have missed an earlier comment, but maybe combine the 200k unit limit with the MSRP restriction (and maybe bump up the unit threshold to one that is more indicative of true volume production).

For example: First 400k vehicles sold by a manufacturer, regardless of price, qualify for the tax credit. Every thing past that is subject to the income restriction. Maybe build a taper over 3-6 months (or whatever the production lead time is, plus a month) so buyers are informed on whether whether their order will qualify. Or, after the 400,000th vehicle is sold, all new orders placed after the first day of the following calendar month are subject to the $80,000 MSRP cap.

Also, that cap may need to have regular interval increases to account for inflation and cost of living changes. There is a reason administrative agencies are authorized to set dollar amounts and other specific quantitative things. Congress delegates to them because they can adjust to changing circumstances faster (and because the employees who work there are knowledgeable and qualified in their fields, as opposed to politicians taking positions based on what will get them re-elected, regardless of what actually makes the most sense).

Seems like a decent split the baby proposal if you ask me. Also probably a foolish pipe dream.

 

[Friscorays]

Sent an inquiry to Rivian customer service about the possibility of entering into a binding purchase agreement before the end of the year for customers effected by vehicle price cap and / or income cap should new legislation become law.

Here is the response I just received from Rivian. It is definitely not what I was looking for and hope Rivian will be willing to work with their customers some once the legislation presumably passes.

"We have seen this request from community members for the very same reason, it's definitely understandable. However, we are not providing such an opportunity at this time. Written and binding contracts are in the form of your purchase agreement and since you have not entered the purchase process, we are unable to fulfill your request."

 

[OEVA]

This Bill adds ~ $3B per year to Teslas bottom line and makes 90% of all EVs on the market more expensive for the US consumer.
Tesla adjusts pricing to regulate demand and has raised prices as often as once a week to achieve this. Historically the have adjusted their pricing by about 80-90% of any Tax Credit status change. If this Bill passes, 3 and Y prices will likely go up by at least $6K (probably by $7,500 or more initially to keep 2022 sales from tanking).
As a Tesla shareholder, I like this. As an EV advocate it is one of the worst pieces of legislation I have seen. Complicated and very expensive to administer and few consumers will.

Make a list of US assembled vehicles.
Remove those over the proposed cap.
Remove those that don't meet battery and mineral content requirements. Since the rules about this are not finalized and we don't know the details from any manufacturer any/all of the vehicles below could be impacted. All we know is the percentage requirements are based on "value" of the components.
What's left? Off the top of my head:

• Tesla Model 3
• Tesla Model Y
• Some versions of the Ford Lightning
• Cadillac Lyriq (some configs?)
• Made in US Nissan LEAF?

 

[zipzag]

I disagree since the sedan price cap is pretty low. Plenty will get affected.

Tesla model Y LR at $66K now. An SUV in name only, but Tesla has lobbyists to help craft the bill.

Rivian is looking really screwed. I want the max pack. I'm not in the camp that thinks the R1T is a great looking vehicle. So without the tax credit I will be less likely to purchase.

Plus for singles and many others the income limit is a killer. Who with a <$150K income is buying a $100K vehicle?

I really dislike Tesla getting tax incentives back while Rivian loses possibly almost all of the credits.

 

[Sgt Beavis]

https://www.bloomberg.com/news/arti...-obscure-rule-as-weapon-against-spending-bill

One paragraph form this article:



Google title in incognito to get around paywall:

GOP Plans to Deploy Obscure Rule as Weapon Against Spending Bill

Yea, I don't think that's going anywhere. The vast majority of the bill has already gotten past the parliamentarian. Killing the battery component section would give the Democrats a chance to say that the Republican's want to help China.

Sen. Sinema is a much bigger threat to this bill.

 

[Engi_Nerd]

I feel like people worrying about income or MSRP caps are missing the point. To me, the EV portion of the bill is designed to be a stick that forces the automotive industry as a whole to be less reliant on Chinese raw materials, which carry substantial risk of political supply chain disruption. I fully expect this bill to pass, resulting in day 1 disqualification of most (if not all) mainstream EVs.

 

[zipzag]

I feel like people worrying about income or MSRP caps are missing the point. To me, the entire bill is designed to be a stick that forces the automotive industry as a whole to be less reliant on Chinese raw materials, which carry substantial risk of political supply chain disruption. I fully expect this bill to pass, resulting in day 1 disqualification of most (if not all) mainstream EVs.

Could the bill's creators really be that smart? There is obviously no need for credits today.

I assume the battery provision will also be particularly bad for Rivian which has less influence with suppliers.

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