Phoenix Mayor Kate Gallego and other local leaders on Tuesday called on policymakers to help lure more electric vehicle businesses to Arizona by forgoing a new cap on a tax credit aimed to lure in buyers.
Gallego spoke with a group of panelists Aug. 17 that included Steve Zylstra, president and CEO of the Arizona Technology Council, and Daniel Witt of Lucid Motors, an EV manufacturer currently building a large manufacturing facility in Casa Grande.
The meeting was in response to a U.S. Senate vote aiming to restrict EV tax credits for more wealthy individuals as well as cap the vehicle price on which those credits could be used.
On Aug. 10, published reports said members of the U.S. Senate, including Arizona Democratic Sens. Mark Kelly and Kyrsten Sinema, voted to restrict EV tax credits for individuals who make more than $100,000 annually as well as limiting their use to vehicles that cost $40,000 or less.
U.S. Sen. Deb Fischer, R-Neb., introduced an amendment to prohibit wealthy Americans from claiming a tax credit when they buy an electronic vehicle.
The amendment to the $3.5 trillion budget is for a tax credit of up to $7,500 for individuals who purchase an EV. The tax break is based on the size of the vehicle’s battery for the first 200,000 plug-in vehicles from a given automaker, according to published reports.
In a Twitter post, Fischer said the Senate “did the right thing” by passing the amendment.
“My amendment (puts) a stop to (wealthy individuals claiming EV tax credits),” Fischer said in a video in front of U.S. Senate members. “It simply prohibits individuals from claiming the credit if they make (more than) $100,000 per year. Or, if the car they are buying costs (more than) $40,000,” she said.
Tax credits for EVs initially were passed as part of the Energy Improvement and Extension Act of 2008 and then as part of federal packages designed to bolster the economy following the Great Recession in 2008. The idea behind the credits was to help lower the cost of EVs by giving buyers a credit for purchasing one.
Credits are phased out by manufacturer once they reached 200,000 vehicles sold. So far, Tesla Inc. is the only company that has reached that goal and no longer has tax credits for purchases.
The challenge for the legislation is that not many current EVs fall under $40,000 and would qualify for the credit, and many of the initial buyers of the vehicles make more than $100,000 annually.
Those attending the panel discussion weren’t in favor of blocking out those with higher incomes from accessing the credits.
Zylstra, in his statement, said EV incentives would help the Arizona job market grow. On the Arizona Technology Council’s Facebook page, an Aug. 17 post shows the entire webinar with a call to action for Sens. Kelly and Sinema.
“I applaud (Kelly and Sinema) for their past climate and business leadership,” Zylstra said. “Now, we all need them to commit to bring these investments in the electronic vehicle’s market to our state.”
The Phoenix mayor said she also “applauded” Kelly and Sinema for their previous work bolstering the state’s tech community, which includes EVs.
“Arizona is well-positioned to take advantage of the electric vehicle economy,” Gallego said at a webinar via Zoom.
For Arizona, tax credits could help what is a burgeoning EV manufacturing hub in the state. Lucid Motors is spending upwards of $4 billion on its manufacturing facility in the state, but their cars, priced starting at $77,400, wouldn’t qualify for the tax credit under the new rules.
Other manufacturers in the state include Nikola Corp., a Phoenix-based firm trying to build hybrid hydrogen-electric vehicles starting with large semitrucks.
Electronic vehicle manufacturers and their suppliers have started to cluster in the Phoenix area with the announcements of companies such as ElectraMeccanica Vehicles Corp. and Exro, a technology company that has developed a new class of power electronics for electric motors and batteries in Mesa, according to a press release.
According to the Greater Phoenix Economic Council, electronic vehicles are expected to grow globally
from 2.5 million in 2020 to 11.2 million in 2025 and 31.1 million in 2030.
The U.S. is expected to hold 14% of the global market share by 2030, with 27% of new sales being electric vehicles, the data said.
More companies are looking at the region for locations.
It was reported Irvine, California-based EV maker Rivian has been sniffing around in the East Valley looking to construct a new manufacturing facility. Company officials have reportedly spoken with Gov. Doug Ducey and are said to be eyeing land near Gold Canyon, east of Apache Junction.
In late July, reports said Rivian wants to build a new $5 billion, 10,000-acre plant. The exact site for a new Rivian plant has not been announced.
Rivian, which makes electronic pickup trucks at its current facility in Normal, Illinois, has not yet announced it would land in the Valley. But according to a news story from Reuters, Rivian “aims to break ground” on the factory this fall and start production during second-quarter 2023, the story said.
The pandemic has put a dent in the automaker’s plans, according to the Reuters report, but the project is eyeing land near Gold Canyon and reported Rivian CEO R.J. Saringe has talked with Gov. Doug Ducey about the proposal.
Rivian’s truck, priced at $73,000, also wouldn’t qualify if those new restrictions are passed.
The city of Phoenix also is looking to expand its use of both electric fleet vehicles and ones bought by consumers extensively by 2030.