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Last week, the Senate Finance Committee approved a federal tax credit worth 10 percent of the price of electric bikes and motorcycles, up to a maximum of $2,500. If the bill passes, it would end an existing electric vehicle tax credit for golf carts that can't be taken on public highways, unlike electric bikes. The committee approved the amendment by a voice vote as part of a broader package of tax measures after a debate over whether e-bikes are worth it. Creating more U.S. jobs, and not losing them overseas, was cited as a reason for supporting it. E-bikes are very big in China – about 25 million of them were sold there last year, compared to less than 100,000 in the United States.

Major car and motorcycle makers are considering entering the e-bike market in the U.S. As for now, three smaller companies have been selling bikes and bringing in investors: Brammo, BRD, and Zero Motorcycles. Last month, Brammo Inc. closed the first $13 million of a $45 million funding round, and has other financial backers.

Some analysts think federal tax credits are critical for building up sales volume and ramping up production volumes, bringing down retail prices long term. Plug-in passenger vehicles have a tax credit worth up to $7,500, depending on the size of the battery. The Chevy Volt can get a $7,500 credit, but the Toyota Prius Plug-In only earns $2,500.

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