Little shock that the same Inflation Reduction Act that will cost everyone more also hikes the cost of EVs they want us to buy.
You notice that you have run out of duct tape so you go to Home Depot. While there, you see a display for cordless drills at 20% off. Coming home, your wife is dismayed that you managed to drop $150 during your jaunt, but you excitedly explain to her that you managed to save thirty dollars. The exact same logic was displayed in Washington last weekend.
After weeks of insisting that Americans needed to pass the Inflation Reduction Act in order to alleviate our hardships, Democrats and media couldn’t stop talking about it from the moment it passed. But, no one could stop uttering the phrase “inflation”. That is what happens when we try to figure out how spending hundreds of billions of dollars on new projects was to be considered a way to save money.
Note all of the items touted in the bill after it passed, none of which concerned lowering the cost of goods and services; extending the ACA subsidy, prescription drugs, climate change, and more than doubling the size of the IRS. The intent to go after companies with high taxes isn’t a move that results in a reduction of the cost of food or other products.
But, I’ll be focusing on one item in order to highlight the cement-head thinking involved in this farce. This will massively change the way we drive electric cars. That is the most common topic that the media has covered. Tax credits will be put in place for those purchasing EVs (the money for which comes from — where?) It is necessary to add a subsidy which does not reduce prices. But there is a series of wrinkles to this payout that undercuts the celebration.
These cuts are based upon income and are restricted to vehicles under certain price points. There is also a limit on vehicle components. Remember that Joe Manchin was required to join the board to pass this checkbook bill. He insisted that EV Batteries must be domestically sourced.
One component of the bill would require that after 2024, no vehicle would be eligible for the tax credit if its battery components came from China. Many vehicles have parts that are sourced from China.
This was an item Manchin declined to remove from the list.
He told reporters last week that he wants automakers to “get aggressive and make sure that we’re extracting in North America, we’re processing in North America and we put a line on China. It is not my belief that we shouldn’t build a transport mode on top of foreign supply chain. I’m not going to do it.”
Manchin managed to have included a mandate that EV batteries used must have 40 percent of their minerals originating from the United States or nations with U.S. free trade agreements, or with materials recycled in North America. Also, vehicles must be made from parts made in America and contain no minerals that are derived from countries considered “foreign entities of concern”. This includes China. As a result, many electric vehicles would be exempted.
Two-thirds (or more) of eligible electric vehicles will be taken off the tax credit list as soon as the bill becomes law. The list of vehicle parts that are eligible for full credit will be reduced to zero next year when other requirements apply. This means that the environmental (not inflation) bill everyone is cheering to move us into EVs will essentially make EVs more expensive.
So go ahead and cheer, Democrats and journalists, as your Inflation Reduction bill has the wording to save the planet and place every American behind the wheel of an electric vehicle. This is not the truth.
