EV Power Play

The U.S. electric vehicle (EV) manufacturing sector is about to get a sales boost from the Biden Administration. The EV market has been rocking because of the continued growing interest in sustainability, especially now that the bleeding-edge vehicle phase is behind us.

President Biden confirmed that EVs would get a stimulus in the not-yet-passed multi-trillion-dollar infrastructure legislation. Accordingly, in the Clean Energy for America bill, the Senate Finance Committee cleared new incentives for domestic manufacturers.

The devil will be in the final details, which are still being worked out on Capitol Hill. If the bill passes and the President signs it, which is likely given his stated support for sustainability initiatives, tax credits to buyers per vehicle will increase substantially. At this point, the bill includes increasing the per-vehicle tax credit to $12,500; that includes semis and other EV delivery vehicles (think Amazon).

Some of the details are interesting. Observers say the bill that cleared the Finance Committee takes a shot at stubbornly non-union Tesla by excluding the manufacturer from the maximum allowed tax credits. Others cheekily point out that Elon Musk has been on the naughty list for leaving California paradise for Texas as a Tesla tit-for-tat.

Another example: It has been reported that federal tax incentives sunset for any manufacturer that produced more than 200,000 vehicles (Tesla). Some production limits will be removed, but the question is whether non-union manufacturers (Tesla and Volkswagen in Tennessee) will be dinged on that point. Politics is driving the production limit "adjustment" as the United Auto Workers (UAW) union usually gets political perks.

The problem is that the 200,000 vehicle limit will soon hurt GM and Ford, both UAW members. Tesla grabbed 80% of the EV market in 2020, but GM is growing fast. The introduction of the amazingly engineered F-150 Lightning—which joins the F-150 pickup family and the best-selling vehicle in America and currently has 100,000 pre-orders—also creates a complication. Ford, GM, and the UAW may lobby for the removal of the 200,000 vehicle production cap entirely to qualify for federal tax credits. Some states will follow the federal lead and increase and/or extend their incentives. All that would be a good thing.

The bottom line is that U.S. manufacturers and their penumbra of value chain partners, carriers, and logistics solutions providers will experience a boom given the public’s appetite for the new improved crop of EVs and the political machinations that are underway.

Get ready if you play in that space or have transportation and logistics partners that do.

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