General Motors (NYSE:GM), Ford (NYSE:F), Stellantis (NYSE:STLA) and Toyota (NYSE:TM) are in the spotlight after their CEOs penned a joint letter to Congress. They urged legislators to lift the federal government’s limit on the number of electric vehicles (EVs) that are eligible for a tax credit of up to $7,500. The CEOs stated the credit is essential to keeping EVs affordable in light of raised commodity costs and production challenges.
Currently, the credit begins to phase out once a company sells 200,000 EVs. GM and Tesla (NASDAQ:TSLA) are the only EV stocks that have exceeded the limit so far. However, the companies involved in the joint letter are expected to exceed it in the near term. They also recommended a “sunset date,” which is similar to an expiration date, once the EV market is more developed.
The letter adds:
“The coming years are critical to the growth of the electric vehicle market and as China and the EU continue to invest heavily in electrification, our domestic policies must work to solidify our global leadership in the automotive industry.”
Meanwhile, the four automotive companies have committed an investment of more than $170 billion through 2030 to aid in EV development. Let’s get into the details.
EV Stocks: Automotive CEOs Urge Congress to Increase Credit Eligibility
Prices for electric vehicle batteries have soared this year as demand outpaces supply. Generally, EV makers utilize a lithium-ion battery, which contains both lithium and nickel. At the beginning of the year, battery-grade lithium prices were around $17,000 per metric ton. Last month, the price spiked to $75,000.
Furthermore, nickel was trading at around $22,355 per metric ton back in January. Today, the price has soared to just above $28,000 and traded as high as $33,924 per metric ton in March.
Toyota stated that it expects its credits to run out by the end of the year. Furthermore, Ford sold about 160,000 EVs last year, so its credits could run out this year as well.
Reuters reports there might not be much time for Congress to extend EV tax credits, as the House and/or Senate could be under Republican control next year.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.