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D.C. Memo: Inflation Reduction Act’s EV tax credits may not have much impact in Minnesota

One reason electric vehicles are not more popular here is because cold weather affects them and steals their range.

President Joe Biden waving from a Hummer EV while touring the General Motors 'Factory ZERO' electric vehicle assembly plant in Detroit, Michigan.
President Joe Biden waving from a Hummer EV while touring the General Motors 'Factory ZERO' electric vehicle assembly plant in Detroit, Michigan.
REUTERS/Jonathan Ernst

WASHINGTON — While the Inflation Reduction Act will help some Minnesotans with prescription drug costs and with health insurance premiums, a provision aimed at spurring the purchase of electric vehicles may have less of an impact.

The wide-ranging act, signed into law by President Joe Biden this week, would give purchasers of a new electric vehicle a $7,500 tax credit and those who buy a used electric vehicle a $4,000 credit.

But, compared to drivers in other states, Minnesota’s car owners purchase relatively few electric vehicles. According to the Minnesota Department of Transportation, Minnesotans owned 15,062 battery powered electric vehicles and 8,835 hybrids as of Dec. 31, 2021.

One reason electric vehicles are not more popular here is because cold weather affects them and steals their range.

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According to AAA, electric vehicles lose 12% of their potential range in normal weather. That loss leaps to 41% when a car’s heater is on full blast.

Electric car batteries are hampered by winter weather in two ways, say AAA. Cold temperatures create resistance against the battery’s chemical reactions, slowing down the energy-producing process. And driving a vehicle in frigid weather requires more power, particularly when it comes to keeping the car warm. In a gas-powered car, the engine creates heat, which can be redirected into the cabin when it’s cold outside.

The new tax credits may prompt more Minnesotans to purchase EVs, but there are restrictions and limitation on these credits that could dampen enthusiasm.

Upon the signing of the Inflation Reduction Act Wednesday, to qualify for a tax credit an EV must be sourced and assembled largely in North America. That’s a problem because an overwhelming majority of minerals and components used in vehicles today come from China.

The Alliance for Automotive Innovation – a trade group that counts Toyota, Ford and GM among its members – estimated that 70% of the 72 EV models currently sold on the market will be ineligible for the new car tax credits because of these restrictions.

However, all those who have purchased a foreign-built EV on back order may be eligible for a previous credit offered on electric vehicles.

Currently, there are no income requirements for who can claim the credit. But starting Jan. 1, credits will be capped to an income level of $150,000 for a single filing taxpayer and $300,000 for joint filers.

There are also limits on which EVs qualify for the credit based on their manufacturer suggested retail price. It is $55,000 for new cars and $80,000 for pickup trucks, SUVs, and vans.

National Republican establish a beachhead in Minnesota

The Republican National Committee is entering the fray in the heated contest between Rep. Angie Craig, D-2nd, and her Republican challenger, Tyler Kistner, by opening an office jointly with the state’s Republican Party in Burnsville on Friday.

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The opening of that office, with Kistner in attendance, is aimed to help the Republican candidate who is locked in one of the tightest congressional races in the country, a race whose outcome could help the GOP wrest control of the House from the Democratic Party or help Democrats hang on to their slim majority in that chamber.

“Their main focus will be on direct voter contact,” said Tyler Dunn, spokesman for the Kistner campaign, of the RNC’s role.

That’s mainly door knocking and other outreach. But the RNC may offer the campaign other help.

Kistner has lagged Craig in fundraising, and the RNC could expend independent expenditures on ads on his behalf and provide campaign strategy staffing help.

By establishing a beachhead in Minnesota, the national Republican Party will also be able to help other Republican candidates in the state, including Scott Jensen, who is challenging Democratic Gov. Tim Walz.

“The goal of the RNC is to elect Republicans up and down the ticket,” said Preya Samsundar, the RNC’s communications director for the Midwest.

If any GOP candidate in the state asks for the national party’s help, Samsundar said the RNC “would be happy to give it.”

But it’s the heated race in the 2nd District that has attracted the most attention from the national political parties.

National Democrats have not opened an office in the state, but the party is involved in helping Craig. The Democratic Congressional Campaign Committee has purchased lots of airtime to run commercials on her behalf. And the Republican Congressional Campaign Committee has done the same for Kistner.

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Meanwhile, Craig’s campaign has begun to air its first television commercial this month. It features her grandson Noah and a dirty diaper that she says represents what she thinks of the “smear campaign” against her.

The Kistner campaign has not run any campaign ads yet, but Dunn says it plans to do so.

Emmer seeks to boost oil, gas drilling

While the Inflation Reduction Act provides nearly $400 billion in incentives to promote clean energy – including new tax breaks for renewable fuels – Congressional Republicans are pushing back with a resolution, which does not carry the weight of law, reaffirming support for American oil and natural gas production.

Co-sponsored by Rep. Tom Emmer, R-6th, the resolution “expresses the sense of the House of Representatives that the United States should support the safe and responsible development of its energy resources via drilling, in an effort to maintain a robust energy supply chain that promotes national security, safeguards against energy scarcity, and reduces energy poverty for all Americans.”

“Domestic energy is essential to America’s national security and economic prosperity,” Emmer said.

While Minnesotans use oil and natural gas in a number of ways, including to run their cars, heat their homes and power their businesses, there is no oil or natural gas production in the state. And Minnesota is becoming a leader in the uses of renewable fuels in electric generation.

Yet Emmer points out that Minnesota “serves as an important corridor for the transportation of natural gas from western states and Canada to reach customers in the eastern United States.”

That may be. But the House is controlled by Democrats and Speaker Nancy Pelosi, D-Calif., isn’t likely to allow the resolution in support of the oil and natural gas industry to see the light of day.