EV tax credits in Biden’s Build Back Better Act will help sell more cars than new chargers in infrastructure bill

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President Joe Biden speaks during a visit to the General Motors Factory ZERO electric vehicle assembly plant, Wednesday, Nov. 17, 2021, in Detroit.

Evan Vucci | AP

DETROIT – Now that President Joe Biden’s $1 trillion infrastructure bill is law, Democrats are setting their sights on his Build Back Better Act to further advance the administration’s electric vehicle agenda.

The bipartisan Infrastructure Investment and Jobs Act provides $7.5 billion to jump start Biden’s goal of having 500,000 EV charges nationwide by 2030. The $1.75 trillion Build Back Better Act, which is close to a vote in the U.S. House, includes tax incentives of up to $12,500 per vehicle to spur consumer demand in electric vehicles.

“The infrastructure bill the President signed this week is a critical step in investing in our future,” Sen. Debbie Stabenow (D-Mich.) said during an event to celebrate GMC Hummer EV production with Biden in Detroit. “Now we’re focused on the next step.”

The event at General Motor’s Factory Zero was largely a parade of Michigan Democrats touting Build Back Better and using the forthcoming Hummer production as a soapbox to tout union-made vehicles.

“This infrastructure law with my Build Back Better plan, we’re going to kickstart new batteries, materials and parts production and recycling, boosting the manufacturing of clean vehicles with new loans and new tax credits,” Biden said during the event. “Creating new purchasing incentives for consumers to buy American-made, union-made clean vehicles like the electric Hummer.”

The $1.75 trillion Build Back Better bill is set for a vote in the House on Friday.

Controversial incentives

‘More critical bill’

BofA Global Research analyst John Murphy described the infrastructure package as “only modestly supportive” of the auto industry’s move toward EVs. He said the $12,500 in tax credits to buy an EV is more crucial to increase adoption.

“As noted, the Biden administration’s Build Back Better agenda is the more critical bill determining regulatory support for the electrification revolution in the U.S.,” Murphy wrote in an investor note last week.

U.S. President Joe Biden gestures after driving a Hummer EV during a tour at the General Motors ‘Factory ZERO’ electric vehicle assembly plant in Detroit, Michigan, November 17, 2021.

Jonathan Ernst | Reuters

‘Ambitious’ goal

The infrastructure package, in the meantime, only covers a portion of the funds needed to build out a truly nationwide charging network.

The $7.5 billion is only about 15% of the $50 billion consulting firm AlixPartners has forecast will be needed to reach Biden’s goal of a nationwide network of 500,000 chargers by 2030.

Building that will take a multitude of public and private sector investments, experts say. They characterize the infrastructure package as a positive step in the right direction.

“It’s not all going to come from government, for sure,” said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners. “It’s presumably going to come more from companies putting utilities, automakers, charging companies, convenience stores, gas stations putting chargers in … The fact there’s any investment in it is a good thing.”

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