Photo: Honda
Congresswoman Terri Sewell announced a new bill that – if enacted – could bring back the EV tax credits as they were previously available. Here’s what’s proposed and why it matters to automakers and EV buyers alike.
The Inflation Reduction Act (IRA) changed the EV tax credits (aka the Qualified Plug-in Electric Drive Motor Vehicle Credit) requirements. This fiscal advantage is now formally known as the clean vehicle credit. Since August 16th, 2022, it has been split into two equal parts and is awarded only if some very important conditions are met. There are four overall requirements and two specific sourcing provisions. Some apply now, while others will enter effect next year and in 2024. It will last until the end of 2032, when the credit will end for good.
Until January 1st, 2023, the $7500 EV tax credit is still available, but only if the final assembly of the EV happens in North America. This leaves EV buyers with only a couple of options – they can buy the Volvo S60 Recharge, the Rivian R1T, R1S, and EDV, the Nissan Leaf, the Lucid Air, Lincoln Aviator PHEV and Corsair PHEV, the Jeep Wrangler 4xe and Grand Cherokee 4xe, the Ford Mustang Mach E, F-150 Lightning, Escape PHEV, E-Transit, the Chrysler Pacifica PHEV, the Mercedes-Benz EQS SUV, the BMW X5 xDrive45e and 330e, and the Audi Q5, according to the latest data published by the U.S. Department of Energy.
From 2023 onwards, the clean vehicle credit of $7,500 can be obtained if the vehicle is an SUV, a pickup truck, or a van that costs $80,000 tops. Any other types of vehicles must have a price of $55,000 maximum to qualify. There is an annual income cap of $150,000 for single filers, $225,000 for the head of the household, and $300,000 for joint filers. The vehicle’s final assembly must happen in North America (not just the U.S.).
Some of the critical minerals used in batteries must be extracted or processed in the U.S. or in countries with which the U.S. has a free trade agreement, or they must use a minimum percentage of critical minerals that have been recycled in North America. Similarly, other battery components must be manufactured or assembled in North America. If one of these last two rules isn’t respected, then the clean vehicle credit is reduced in half.
Essentially, lawmakers wanted to bring more manufacturing jobs to the U.S. and North America through this part of the Inflation Reduction Act. They also aimed for a more stable supply chain. But now, things could temporarily change through another bill named the Affordable Electric Vehicles for America Act. The core stipulations mentioned above would be delayed by three years, until December 31st, 2025, if the proposed changes were to pass.
Congresswoman Terri Sewell argued this change could be a welcomed one because it allows companies like Hyundai to adapt. The South Korean automaker is set to open a brand-new plant in Georgia.
The bill sponsors said in a press release available down below that they want it to pass because “oil companies insist on continuing their exorbitant price-gouging of American families at the pump” and “these tax credits offer hardworking Americans immediate and significant financial assistance to help them purchase a vehicle that is better both for the environment and their wallets.”
Until January 1st, 2023, the $7500 EV tax credit is still available, but only if the final assembly of the EV happens in North America. This leaves EV buyers with only a couple of options – they can buy the Volvo S60 Recharge, the Rivian R1T, R1S, and EDV, the Nissan Leaf, the Lucid Air, Lincoln Aviator PHEV and Corsair PHEV, the Jeep Wrangler 4xe and Grand Cherokee 4xe, the Ford Mustang Mach E, F-150 Lightning, Escape PHEV, E-Transit, the Chrysler Pacifica PHEV, the Mercedes-Benz EQS SUV, the BMW X5 xDrive45e and 330e, and the Audi Q5, according to the latest data published by the U.S. Department of Energy.
From 2023 onwards, the clean vehicle credit of $7,500 can be obtained if the vehicle is an SUV, a pickup truck, or a van that costs $80,000 tops. Any other types of vehicles must have a price of $55,000 maximum to qualify. There is an annual income cap of $150,000 for single filers, $225,000 for the head of the household, and $300,000 for joint filers. The vehicle’s final assembly must happen in North America (not just the U.S.).
Some of the critical minerals used in batteries must be extracted or processed in the U.S. or in countries with which the U.S. has a free trade agreement, or they must use a minimum percentage of critical minerals that have been recycled in North America. Similarly, other battery components must be manufactured or assembled in North America. If one of these last two rules isn’t respected, then the clean vehicle credit is reduced in half.
Essentially, lawmakers wanted to bring more manufacturing jobs to the U.S. and North America through this part of the Inflation Reduction Act. They also aimed for a more stable supply chain. But now, things could temporarily change through another bill named the Affordable Electric Vehicles for America Act. The core stipulations mentioned above would be delayed by three years, until December 31st, 2025, if the proposed changes were to pass.
Congresswoman Terri Sewell argued this change could be a welcomed one because it allows companies like Hyundai to adapt. The South Korean automaker is set to open a brand-new plant in Georgia.
The bill sponsors said in a press release available down below that they want it to pass because “oil companies insist on continuing their exorbitant price-gouging of American families at the pump” and “these tax credits offer hardworking Americans immediate and significant financial assistance to help them purchase a vehicle that is better both for the environment and their wallets.”
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