Thomas Gallatin / August 12, 2022

The Dems’ EV Tax Credit Scam

Biden’s spending bill creates more of an EV boondoggle than currently exists.

“Americans can help save the planet by buying electric vehicles.” That’s the message Joe Biden and his Democrats are preaching, echoing scientifically suspect “climate change” agenda warnings over the need to end America’s dependence on fossil fuel and totally embrace “renewable energy.” And, sounding like cult leaders, they speak in moralistic absolutes, labeling anyone who dares to question their climate change narrative a “climate denier” who is guilty of not embracing “the science.”

Such claims are specious, but they get a political pass. It’s one of the reasons why so many people today are buying into the EV fantasy of a world where “evil” gas-powered vehicles must become a thing of the past. And Democrats have invested your income taxes heavily in this scheme by codifying it into law.

We’ve noted in the past how Democrat-run California has led the way into the anti-fossil fuel new world by legislating that all new cars sold in the state by the year 2035 must be “zero-emission vehicles.” (Never mind all the emissions and other environmental costs to supply, build, and power those cars; as long as there’s no tailpipe, it’s “clean.”)

With prices at the pump still sitting at nearly $4 per gallon, Biden and company are touting EVs as the “solution.” Of course, the obvious monetary objection that many have repeatedly raised to this pie-in-the-sky thinking is the fact that the average price of an EV is already $10,000 more than a commensurate gas-powered vehicle. And that price is getting ready to go higher.

In Biden’s just passed deceptively named Inflation Reduction Act, they’ve included another whopping $7,500 EV consumer tax credit. This will supposedly offset enough of the higher purchasing cost of EVs so Americans won’t have a good excuse not to buy one. However, as we have noted previously, this tax credit is a boondoggle that actually only serves to help car manufacturers.

As Mark Alexander previously noted regarding these so-called “tax credits”: “Let’s be clear about the ‘climate’ bucks: Expanding the $7,500 taxpayer-funded ‘credit’ for buying an electric vehicle, is all smoke and mirrors. It does not help the consumer. Yes, purchasers, mostly wealthy Americans, do get a tax credit, but the price of that credit is already baked into the retail price of the vehicle. In other words, the purchaser is buying an overpriced vehicle, for which American taxpayers give them a rebate, and the seller is actually collecting the windfall. Government-induced tax credits to change behavior don’t work, and, as is the case with government solar energy tax credits, they actually inflate retail consumer costs by the amount of the credit.”

Case in point: Regarding the new tax credits, Ford just announced it is raising the price on its electric F-150 Lightning for 2023 by — wait for it — $6,000 to $8,500. How about that? The very week that Democrats pass a spending bill that includes a $7,500 EV tax credit, one of the nation’s largest automakers announces a price increase on its fleet of EVs by roughly the amount of that tax credit.

That’s not the end of this maddening story, however, as a closer look at the EV tax credit reveals that nearly half of the EVs on the market today don’t even qualify. Due to the legislation’s requirement that at least 40% of a new electric vehicle’s battery components have to originate and be manufactured in North America, many EVs on the market today don’t check off the box. That, of course, is to spur domestic battery production. By 2027, the battery manufacturing requirement increases to 80%, and it rises to 100% by the year 2029.

Now, we’d love to see more stuff made in America, but currently China dominates the EV battery market — from material to production. That’s unlikely to change rapidly because Democrats declared it should.

So, already-expensive EVs will only get more expensive over the coming years. The auto industry will inflate prices to correspond to the available tax credits, and Americans will find themselves on the losing end of central planning. Again.

(Updated.)

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