In a development aimed at further boosting the adoption of electric vehicles the U.S. Senate Finance Committee has advanced legislation aimed at boosting the tax credits for electric vehicles to as much as $12,500, as long as they are assembled by union workers in the country. However, the bill limits tax credits to vehicles whose retail price is below $80,000. Current tax credits for EVs is $7,500 with no maximum price of vehicle; they also phase out for individual automakers once they hit a threshold of 200,000 sale of EVs.

Tesla and General Motors have both hit that cap and currently do not qualify for the $7,500 tax credit.

The “Clean Energy for America” bill, which advanced on a 14-14 tie vote, eliminates the existing EV cap, with the tax credit phasing out once more total EV sales reach 50% of all U.S. passenger vehicles sales.

The bill, led by Senator Debbie Stabenow, a Michigan Democrat, would boost the $7,500 tax credit by $2,500 for vehicles assembled in the United States and another $2,500 for cars at facilities whose production workers are members of, or are represented by, a labor union.

These provisions will provide smaller credits to automakers such as Volkswagen, Tesla, and others who do not have U.S. union workers; the new tax credit is also not applicable to companies building EVs outside the United States.

The tax incentives are estimated to cost $31.6 billion through 2031, according to a congressional estimate.

The bill will now have to be approved by the full Senate as well as the U.S. House of Representatives.

The bill also includes a 30% tax credit for automakers for retooling or building new facilities to produce advanced energy technologies including batteries and new incentives to purchase commercial electric vehicles.

Praising the proposed legislation, United Auto Workers President Rory Gamble said, “EV production will directly create the good paying union jobs of the future President Biden has championed.”

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