The likely failure of President Biden’s “Build Back Better” plan, which contains considerable incentives for the expanding sector, sent shares of electric car companies plunging on Monday (December 20). EV start-ups like Future, Lordstown Motors, Faraday, and Nikola all had their stock prices drop by more than 7% on Monday. Rivian Automotive, which went public last month in a blockbuster IPO, reached a fresh low of $88.40 per share on Monday.
Other automakers’ stock prices fell during the trading session, including Tesla and General Motors, which are no longer eligible for federal EV tax subsidies yet were going to under Build Back Better. The Build Back Better plan includes EV incentives of up to $12,500 per vehicle, which are seen as important in spurring customer demand for EVs, which are significantly more expensive than their conventional internal combustion engine (ICE) counterparts.
The Build Back Better bill, together with the new infrastructure plan, has been hailed by transportation experts as a significant part of Biden’s plan to assist accomplish the president’s EV sales goal. Biden has stated that by 2030, 50% of all new vehicles sold will be electric vehicles, incorporating plug-in hybrid electric cars with both electric and internal combustion engines.
Biden’s bipartisan infrastructure package included $7.5 billion for the Electric Vehicle chargers, but Wall Street thought the Build Back Better incentives, which are now unlikely to pass, were more important. Senator Joe Manchin, a Democrat from West Virginia, effectively killed the bill when he said he wouldn’t support it in the Senate’s 50-50 split.
“I can’t vote for it if I can’t even articulate it to the people of West Virginia. And I’m afraid I won’t be able to vote to keep this bill alive. I’m afraid I won’t be able to. I’ve tried everything I can think of. On “Fox News Sunday,” Manchin said he couldn’t get there because he was concerned about increasing the national debt.
Manchin’s decision is “a sudden and inexplicable shift in his attitude, and a breach of his obligations to the President and the Senator’s colleagues in both the House and Senate,” according to Jen Psaki, White House press secretary. Manchin had promised President Biden that he was going to support the Build Back Better framework, according to Psaki. Last week, he also said he will “continue discussions in the coming days, and work with us to establish that common ground.”
The Build Back Better EV incentive includes an existing $7,500 tax credit for purchasing a plug-in electric car, plus an additional $500 if the vehicle’s battery is built in the United States. It also includes a contentious $4,500 tax credit if a vehicle is built in the United States with union employees, which has sparked outrage among non-Detroit manufacturers whose American workers aren’t unionized.