What Happened: $7,000 of tax credit may soon be given to hundreds of thousands more U.S. electric vehicle buyers with a potential overhaul of purchasing incentives coming to the states.

The Growing Renewable Energy and Efficiency Now (GREEN) Act, legislation introduced by democrats, looks to increase tax credits issued to EV buyers. In all likelihood, American EV makers Tesla Inc TSLA, Ford Motor Company F, and General Motors Company GM would stand to gain the most given Tesla's current global sales, while Ford and GM continue their push into the market.

Here are the details of the legislation involving the EV industry at large:

The provision expands the qualified plug-in electric drive motor vehicle credit under Section 30D to apply a new transition period for vehicle sales of a manufacturer between 200,000 and 600,000 electric vehicles (EVs), under which the credit is reduced by $500. 

The provision replaces the current phaseout period (which begins at 200,000 vehicles) with a phaseout period that instead begins during the second calendar quarter after the 600,000-vehicle threshold is reached. At the start of the new phaseout period, the credit is reduced by 50% for one quarter and terminates thereafter. 

For manufacturers that pass the 200,000-vehicle threshold before the enactment of this bill, the number of vehicles sold in between 200,000 and those sold on the date of enactment are excluded to determine when the 600,000-vehicle threshold is reached.

Why It Matters: Democrats are back in the White House with the House and Senate majorities in hand. 

It's expected the Biden administration’s embrace of clean energy will provide favorable business conditions for EV makers in the coming years, providing strength to the electric vehicle, fuel cell, and biogas industries at large.