During the first session of the 118th Congress, Ohio Senator J.D. Vance submitted a measure that, if it were to succeed, would be extremely expensive for American taxpayers, ignore climate change, and sell all of us out to the oil and gas business. Once a fierce opponent of Trump’s incendiary “America’s Hitler” persona, Vance has dramatically warmed up to him, changing from a Never Trump supporter to MAGA with direct assistance from Elon Musk and Tucker Carlson. His planned Drive American Act demonstrates his embrace of Trump-style populism and climate denialism, which were major components of his reinvention.
Impact of the Drive American Act on Vehicle Purchases and Environmental Considerations
The first portion of the Drive American Act aims to completely repeal the electric car tax rebate scheme implemented by the Biden administration. In the second part of the plan, Vance suggests that American taxpayers adopt his absurdly circular reasoning, which would substitute a $7,500 refund on all new automobiles, trucks, and SUVs with gasoline and diesel engines. More seats and a higher cargo would entitle a vehicle to more of the incentive. You would have to live in a family with less than $300,000 in income in order to benefit from this, and the car could not cost more than $80,000. Both “limits” are much above the mean.
More electric cars are being purchased by Americans than ever before; this year, they are predicted to account for more than 10% of all new automobiles sold in the US. This is partly because of the effective incentive scheme that favors automobiles and parts built in the United States and by unions over those made anywhere else. Instead, Americans would be forced to buy larger, more costly, gas-guzzling SUVs and pickup vehicles under Vance’s idea. To qualify for the entire $7,500 credit under the Drive American Act, your new vehicle must be able to transport a large number of passengers.
Incentive Calculation and Eligibility Analysis for American-Assembled Gas and Diesel-Powered Cars
Under the plan as drafted, every gas or diesel-powered American-assembled car sold would be immediately eligible for a $2,500 price cut. An extra $500 incentive is offered “for every 250 pounds of payload capacity in excess of 1,000 pounds,” which means a car with a 2,500-pound payload would be eligible for an additional $3,000 in rebates. In the final incentive scheme, cars with more than four seats would get an extra $1,000 for each seat. A car with seven seats would be eligible for a $3,000 incentive. Since the combined bonus incentives are limited to $5,000, you may potentially earn the whole $7,500 for a truck with a 3,500-pound payload capacity or a seven-seat SUV with at least 2,000 pounds of payload capacity.
Every year, the United States produces roughly 11 million new cars, of which about 1.6 million are exported. We may infer that at least 80% of automobiles sold in the United States fall below the $80,000 criterion, given that the average transaction price for new cars is now about $47,000. Approximately 7% of all new cars sold in the United States in May were plug-in hybrids and electric vehicles. We’ll assume that 6,993,600 gas and diesel automobiles built in the United States qualify for at least the base $2,500 amount for the sake of this exercise.
