Tesla and GM would be extremely happy.

Members of the Democrat-controlled US Congress are moving forward with more green initiatives. Several Democrats earlier this month reintroduced the GREEN Act which, among other things, calls for the return of EV federal tax credits to automakers whose allocated credits have already expired, such as Tesla and General Motors.

CNET reports the bill has not yet been taken up by Congress. If passed, it must then go to the Democratic-controlled Senate and, ultimately, the White House for it to become law. Needless to say, automakers with EV-focused lineups will very much want to see this happen. Tesla and GM could regain the ability to promote their EVs with a federal tax credit, for starters. Helping to offset the price of any new EV, whether it’s a pricey Tesla Model S Plaid or an affordable Chevy Bolt, is a winning selling point.

The US government first began offering EV tax credits during the Bush administration and was later expanded by Obama. Currently, once an automaker sells over 200,000 EVs in the US, however, the tax credit amount gradually gets reduced. Tesla ran out of credits in late 2019 and GM in March 2020.

The 2021 version of the GREEN Act (an earlier version was introduced last June and failed) proposes a few changes to the EV tax credit system. Instead of a $7,500 tax credit, it’d be $7,000. Plug-in hybrids would qualify for less because they have smaller batteries and aren’t fully emissions-free. Also, the revised act increases the credit cap to 600,000 vehicles.




Perhaps best of all, the legislation aims to give currently credit-deprived automakers like Tesla and GM a good deal by not making the vehicles they sold from the time their credits ran out until the day President Biden would sign the bill count towards the 600,000 mark. They would instead begin at 200,000.

Once an automaker hits 600,000, the bill changes the phase-out process. Instead of reducing the credit amount over four business quarters, the credit is reduced by 50 percent for one quarter before they’re gone completely. The bill further helps buyers claim up to a $2,500 tax credit when purchasing a used EV, but the vehicle must be at least two years old and the sale price but be less than $25,000. Biden has already shown a preference for EVs so chances are high some form of this bill will become law.