Biden's long game for American-made electric vehicles

[Jilly_in_VA]

By Rebecca Heilweil

Much hay has been made about how the Inflation Reduction Act represents America’s biggest climate investment ever. But reading between the lines of the legislation, which tackles everything from taxes to health care, shows that the nearly $740 billion law has some caveats, including new provisions to a more than decade-old EV tax credit.

For years, prospective electric vehicle buyers could count on a federal vehicle tax credit, which amounts to a $7,500 discount on a wide range of EV models. The incentive was originally authorized in 2008 and played a critical part in promoting early EV startups and encouraging price-conscious consumers to take the plunge and go electric. The IRA extends the tax credit until 2032 and establishes an additional $4,000 credit for used EVs.

But there are new rules, too, for a vehicle to qualify for that credit. The final assembly of any qualified vehicles must take place in North America, and the credit will also hinge on the vehicle’s size, its total cost, and potential buyers’ income. Starting before 2024, at least 40 percent of the critical minerals and at least half of the battery components used to build new eligible EVs will need to come from the US or one of its free trade partners to access the full credit.

But for most consumers, the new tax credit could prove elusive. Around 70 percent of the electric, hydrogen, and hybrid cars currently sold in the US won’t be eligible for the credit, according to the Alliance of Automotive Innovation, a trade group that represents the car industry. An August analysis of the IRA proposal from the Congressional Budget Office estimates that only about 11,000 vehicles could receive the credit in 2023, and around 60,000 vehicles in 2024, according to an August analysis of the IRA proposal. While the Internal Revenue Service is charged with determining which vehicles are eligible, experts told Recode that they expect very few cars to receive the credit over the next several years, especially since the law’s sourcing requirements are designed to become more stringent.

But that may not be the case forever. The tax credit is only one part of the Biden administration’s plan for a new era of American auto manufacturing, which includes everything from a new push to rethink mining regulations to the Bipartisan Infrastructure Act’s $3 billion investment in the domestic battery supply chain. Together, these efforts, and a surge in new EV factories based in the US, could make American-made electric vehicles much more common in the latter part of the decade. At the same time, this credit won’t necessarily disincentivize people from buying EVs that are made abroad, especially as electric vehicle prices decline and as geopolitics continue to complicate the world’s access to fossil fuels.

https://www.vox.com/recode/23331223/electric-vehicles-biden-ev-inflation-reduction-act

[albacore]

1. I'm planning on getting a Chevy Bolt EUV after the first of the year.

Everything I've seen says it will get the $7,500 tax credit. And the price of the 2023 will be lower than the 2022.

Anybody know anything different on that particular model?