Those 20 EVs will keep their tax credits for now

Those 20 EVs will keep their tax credits for now
Written by admin

Image for the article titled These 20 Electric Cars Will Keep Tax Credits For Now

Image: Ford

There are 20 electric cars that will qualify for a $7,500 EV tax credit by the end of the year, the US and Mexico are finalizing a labor investigation at Mexico’s Stellantis plant, and Warren Buffett doesn’t seem worried about the auto market. All this and more Morning shift Wednesday (my friends), August 17, 2022.

1st Gear: 20 Classification

President Biden signed the sweeping tax, climate and health care bill into law on Tuesday, and the administration now says about 20 models will qualify for an EV tax credit of up to $7,500 through the end of 2022.

However, the law immediately ends the loans for almost three-quarters of the 72 previously eligible models. That is why to be eligible, EVs must now be assembled in North America.

The number of eligible vehicles will change on January 1, 2023, when new restrictions and price caps on battery and mineral sources come into force. The Alliance for Automotive Innovation, an industry trade group, said it would make all or nearly all EVs non-compliant. From Automotive News:

The automaker group said it will work with the administration as “they issue critical guidance and new rules — so the EV tax credit is as accessible and beneficial to consumers as possible.”

Currently eligible vehicles are the 2022 EV or plug-in hybrid electric versions of the Audi Q5; BMW X5 and 3-Series Plug-in; Ford Mach-E, F-Series, Escape PHEV and Transit Van; Chrysler Pacifica PHEV, Jeep Grand Cherokee PHEV and Wrangler PHEV; Lincoln Aviator PHEV and Corsair Plug-in; Lucid Air; Nissan Leaf; Volvo S60; and Rivian, R1S and R1T. The 2023 Nissan Leaf, BMW 3-Series and Mercedes EQS are also eligible.

Some models are manufactured both in North America and abroad, and consumers should check their vehicle identification numbers to ensure compatibility, the Treasury Department said.

Buyers may still be eligible if they enter into binding written contracts before Biden is signed, and some automakers have required customers to make part of their deposits non-refundable.

The law also makes General Motors and Tesla vehicles eligible for tax credits starting on January 1. They had previously lost the credits after hitting the old 200,000-vehicle per manufacturer cap. However, it’s not clear if any of the vehicles they make would qualify under the new restrictions.

2nd Gear: U.S. and Mexican Labor Probe Ends

The U.S. and Mexican governments have resolved a labor dispute with a Mexican Stellantis manufacturing plant.

The agreement at Teksid Hierro de Mexico is the fourth labor probe to end under the 2020 United States-Mexico-Canada Agreement (USMCA). It was one of Mexico’s longest-running labor conflicts.

U.S. labor officials said workers at the plant, which makes parts for heavy vheicles including Cummins, Volvo and Mack, were previously denied their rights to choose their union and do collective bargaining. From Reuters:

Reuters reported last week that Teksid, which has about 1,500 workers, expects to close the job without going to a dispute panel after the company recognizes an independent union.

Since 2014, workers have been fighting to form a union known as “Miners” at the Texid plant in northern Coahuila state, accusing the company of colluding with a powerful rival union to thwart their efforts.

The USMCA resolution “will help end eight years of wrongdoing against Taxi workers,” said US Labor Secretary Marty Walsh.

As part of the deal, a unit of Italian-French carmaker Stellantis agreed to rehire with back pay 36 workers it said were fired in retaliation for their support of a union representing metalworkers and miners in July.

Stellantis says he is “cooperating closely” with government officials during the process. The company says it respects collective bargaining rights and will comply with local laws.

3rd Gear: Buffett isn’t worried

Warren Buffett does not thinks the good times are over for car dealers. Berkshire Hathaway tripled its stake in longtime auto finance company Ally Financial to $1 billion in the second quarter of 2022, new filings show.

The world’s most famous investor believes that credit spreads will remain strong and default rates will remain low. From Financial Times:

Ally’s stock is up 57 percent in the two pandemic years. Consumers flocked to buy used cars. Car manufacturers could not meet the demand for new cars.

Allied shares have fallen by a quarter so far in 2022. Wall Street is concerned about normalization in US consumer finances and the auto market. Ally says those concerns remain overblown, an idea now backed by the legendary investor’s tacit approval.

Between the end of 2019 and the beginning of 2022, the Mannheim Used Car Value Index increased by a staggering 70 percent. Higher used car prices supported larger loans at a time when there were no concerns about immediate loan losses.

Compared to 2021, net interest income increased significantly in the current quarter. However, Ally was forced to accumulate such large loan-loss provisions that pretax income fell 40 percent year over year. The company insists these provisions are just a natural return to normal levels.

The move is a vote of confidence not just in auto loans, but in consumer spending power as a whole. If Warren isn’t worried about our ability to spend money with confidence, why should we?

4th Gear: BMW Battery Replacement

China’s EVE Energy CO Ltd will begin supplying BMW with large cylindrical batteries for the company’s electric cars in Europe. It is reported that BMW is following Tesla’s path by adopting new technology. New battery cars are expected to hit the market in 2025.

Earlier this year, Tesla began production of its new large format 4680 cylindrical battery. 4680 means 46 millimeters in diameter and 80 millimeters in length. Tesla said it expects the new battery to lower production costs and improve range compared to the current generation of 2170 cylindrical batteries.

EVE’s batteries are expected to be similar in size to Teslas. From Reuters:

EVE, BMW’s supplier in China, did not directly respond to requests from Reuters for comment. BMW said it plans to release some battery news in early September, but declined to comment further.

Currently using prismatic batteries, BMW’s change highlights the increased speed for larger-format cylindrical batteries. Rectangular prismatic batteries have become the most common form of automotive batteries in the past two years because they can be packed more densely and save costs. But proponents of cylindrical batteries argue that new cells with larger formats have become more cost-effective due to improved energy density.

China’s CATL ( 300750.SZ ), the world’s largest battery maker, will also start supplying cylindrical batteries to BMW from 2025.

Expectations are high that these batteries will also be large-sized cells. CATL did not respond to a request for comment on the planned measures.

It is currently unclear how many batteries BMW plans to purchase from EVE and CATL.

5th Gear: Out of Power

Toyota has suspended operations at one of its plants in China after local authorities ordered it to conserve electricity. According to a company spokesperson, the manufacturing facility will be closed until Saturday.

Sichuan province, where the plant is located, is reducing industrial electricity consumption during the worst heat wave in 60 years. This has caused producers of fertilizer, lithium and other metals to shut down plant operations or limit production. From Reuters:

Industrial users in 19 out of 21 cities in the province were ordered to stop production from August. By August 15, priority should be given to residential electricity supply, according to a notice issued on Sunday by the Sichuan Department of Economy and Information Technology.

“We are monitoring the situation daily and following the government’s instructions,” a Toyota spokesman said.

Toyota won’t say how much the suspension will affect vehicle output.

Reverse: Up!

It’s transport content if I’ve ever seen it.

About the author


Leave a Comment