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Auto Biggies Call for Removal of Federal EV Tax Credit Cap
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Legacy automakers including General Motors (GM - Free Report) , Ford (F - Free Report) , Stellantis (STLA - Free Report) and Toyota (TM - Free Report) are turning to congressional leaders, requesting them to remove limits on the number of green vehicles that are eligible for a tax credit of up to $7,500. In a joint letter to the leaders of the Senate and House of Representatives on Monday, CEOs of these four auto giants requested the Congress to lift the EV tax credit cap until the electric vehicle (EV) market gets mature. They believe that the move would lead to greater adoption of battery-powered cars by consumers. “Eliminating the cap will incentivize consumer adoption of future electrified options and provide much-needed certainty to our customers and domestic workforce,” the CEOs wrote.
The $7,500 incentive has been in place for several years to lure buyers to transition away from ICE cars. Currently, the number of tax credits permitted is capped at 200,000 cars sold by a particular company. The credit, which starts to phase out once a company has reached the 200,000 EV sales mark, is especially essential at a time when automakers are struggling amid the chip crunch and high commodity costs. As it is, supply chain constraints have escalated the cost of production of EVs and these costs are more often than not passed on to car buyers only. With Americans staring at sky-high inflation, rising interest rates and high fuel prices, the elimination of this federal EV tax credit cap will help in the acceleration of the adoption of zero-emissions cars, which is the need of the hour.
While General Motors has already exhausted its 200,000-unit mark, Ford and Toyota are expected to hit the cap this year. It is not certain yet whether the companies’ request would be heeded. For instance, Senator Joe Manchin, recently questioned the need for expanding U.S. EV tax credits in the face of the soaring popularity of green cars. However, the companies are of the view that their proposal would make the battery-powered cars slightly affordable at a time when consumers might be shying away from making discretionary purchases in the wake of economic slowdown. The letter stated, “The coming years are critical to the growth of the electric vehicle market and as China and the EU continue to invest heavily in electrification, our domestic policies must work to solidify our global leadership in the automotive industry.”
The joint letter also notes that the four companies F, GM, STLA and TM have vowed to spend more than $170 billion through 2030 to rev up their e-mobility game, including near-term investments of more than $20 billion in the United States.
Here’s a brief overview of the electrification targets of these auto biggies.
In one of the boldest steps under the leadership of CEO Jim Farley, Ford is separating its EV business from its legacy ICE business to boost its position in the e-mobility domain. The firm’s aggressive EV push, with planned spending of around $50 billion by 2026 and the target production of over 2 million EVs by 2026-end (representing 70% CAGR), augurs well for long-term growth. By 2030, Ford expects EVs to account for 50% of its global sales, which will cement its position in the red-hot EV landscape.
General Motors’ big push toward EVs is also commendable. The automaker plans to roll out 30 fresh EV models by 2025-end. Key launches, including the GMC Hummer EV, Cadillac Lyriq crossover EV, Equinox EV, Silverdo EV and Blazer EV among others, are expected to buoy top-line growth. GM’s Factory ZERO and plants in Spring Hill and CAMI are setting the stage for the company’s electrification goals.General Motors aims to spend $35 billion through 2025 for EV development. The BrightDrop venture, designed to offer an integrated ecosystem of electric first-to-last-mile products, is set to boost prospects. The launch of Ultium Charge 360, aimed at improving the charging experience, also bodes well. Besides the Ultium platform, which is set to rev up its electrification capabilities, GM’s Ultifi platform seeks to enable the firm to achieve leadership in software and services.
Stellantis has also expedited its electrification plans lately. The company stated that it would spend $35 billion (30 billion euros) in electrification and related software investments through 2025. It aims to cover 40% of sales in the United States and 70% of sales in Europe from low-emission vehicles by 2030.At one of its strategy meetings, Stellantis launched the Dare Forward 2030 plan to aid its transition to a carbon net-zero entity by 2038, with a 50% reduction by 2030. It plans to have more than 75 BEVs and reach global annual BEV sales of 5 million vehicles by 2030.As part of the Dare Forward strategy, Stellantis aims to increase its planned battery capacity by 140 gigawatt-hours to nearly 400 GWh, supported by five battery plants.
Toyota’s big bet on electrification is also noteworthy. The Japanese auto giant aims to generate 40% of its global sales from EVs by 2025 and 70% by 2030. The company plans to invest 4 trillion yen ($35 billion) for a lineup of 30 BEV by 2030. It aims to expand global sales of BEVs to 3.5 million units a year by 2030. The automaker’s 4 trillion-yen investment for the development of other electrified vehicles, including hybrids and fuel-cell vehicles, by the end of the decade and 2 trillion yen ($18 billion) investment in battery development will strengthen its position in the EV domain.
Image: Bigstock
Auto Biggies Call for Removal of Federal EV Tax Credit Cap
Legacy automakers including General Motors (GM - Free Report) , Ford (F - Free Report) , Stellantis (STLA - Free Report) and Toyota (TM - Free Report) are turning to congressional leaders, requesting them to remove limits on the number of green vehicles that are eligible for a tax credit of up to $7,500. In a joint letter to the leaders of the Senate and House of Representatives on Monday, CEOs of these four auto giants requested the Congress to lift the EV tax credit cap until the electric vehicle (EV) market gets mature. They believe that the move would lead to greater adoption of battery-powered cars by consumers. “Eliminating the cap will incentivize consumer adoption of future electrified options and provide much-needed certainty to our customers and domestic workforce,” the CEOs wrote.
The $7,500 incentive has been in place for several years to lure buyers to transition away from ICE cars. Currently, the number of tax credits permitted is capped at 200,000 cars sold by a particular company. The credit, which starts to phase out once a company has reached the 200,000 EV sales mark, is especially essential at a time when automakers are struggling amid the chip crunch and high commodity costs. As it is, supply chain constraints have escalated the cost of production of EVs and these costs are more often than not passed on to car buyers only. With Americans staring at sky-high inflation, rising interest rates and high fuel prices, the elimination of this federal EV tax credit cap will help in the acceleration of the adoption of zero-emissions cars, which is the need of the hour.
While General Motors has already exhausted its 200,000-unit mark, Ford and Toyota are expected to hit the cap this year. It is not certain yet whether the companies’ request would be heeded. For instance, Senator Joe Manchin, recently questioned the need for expanding U.S. EV tax credits in the face of the soaring popularity of green cars. However, the companies are of the view that their proposal would make the battery-powered cars slightly affordable at a time when consumers might be shying away from making discretionary purchases in the wake of economic slowdown. The letter stated, “The coming years are critical to the growth of the electric vehicle market and as China and the EU continue to invest heavily in electrification, our domestic policies must work to solidify our global leadership in the automotive industry.”
The joint letter also notes that the four companies F, GM, STLA and TM have vowed to spend more than $170 billion through 2030 to rev up their e-mobility game, including near-term investments of more than $20 billion in the United States.
Here’s a brief overview of the electrification targets of these auto biggies.
In one of the boldest steps under the leadership of CEO Jim Farley, Ford is separating its EV business from its legacy ICE business to boost its position in the e-mobility domain. The firm’s aggressive EV push, with planned spending of around $50 billion by 2026 and the target production of over 2 million EVs by 2026-end (representing 70% CAGR), augurs well for long-term growth. By 2030, Ford expects EVs to account for 50% of its global sales, which will cement its position in the red-hot EV landscape.
General Motors’ big push toward EVs is also commendable. The automaker plans to roll out 30 fresh EV models by 2025-end. Key launches, including the GMC Hummer EV, Cadillac Lyriq crossover EV, Equinox EV, Silverdo EV and Blazer EV among others, are expected to buoy top-line growth. GM’s Factory ZERO and plants in Spring Hill and CAMI are setting the stage for the company’s electrification goals.General Motors aims to spend $35 billion through 2025 for EV development. The BrightDrop venture, designed to offer an integrated ecosystem of electric first-to-last-mile products, is set to boost prospects. The launch of Ultium Charge 360, aimed at improving the charging experience, also bodes well. Besides the Ultium platform, which is set to rev up its electrification capabilities, GM’s Ultifi platform seeks to enable the firm to achieve leadership in software and services.
Stellantis has also expedited its electrification plans lately. The company stated that it would spend $35 billion (30 billion euros) in electrification and related software investments through 2025. It aims to cover 40% of sales in the United States and 70% of sales in Europe from low-emission vehicles by 2030.At one of its strategy meetings, Stellantis launched the Dare Forward 2030 plan to aid its transition to a carbon net-zero entity by 2038, with a 50% reduction by 2030. It plans to have more than 75 BEVs and reach global annual BEV sales of 5 million vehicles by 2030.As part of the Dare Forward strategy, Stellantis aims to increase its planned battery capacity by 140 gigawatt-hours to nearly 400 GWh, supported by five battery plants.
Toyota’s big bet on electrification is also noteworthy. The Japanese auto giant aims to generate 40% of its global sales from EVs by 2025 and 70% by 2030. The company plans to invest 4 trillion yen ($35 billion) for a lineup of 30 BEV by 2030. It aims to expand global sales of BEVs to 3.5 million units a year by 2030. The automaker’s 4 trillion-yen investment for the development of other electrified vehicles, including hybrids and fuel-cell vehicles, by the end of the decade and 2 trillion yen ($18 billion) investment in battery development will strengthen its position in the EV domain.
While Ford, General Motors and Toyota carry a Zacks Rank 3 (Hold), Stellantis presently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.