Automakers scramble to decipher new US EV tax credits – HT Auto | Vette Leader

U.S. automakers and dealers are trying to figure out if they can still offer $7,500 in tax credits to potential electric vehicle (EV) buyers as Congress prepares for final votes today on a bill calling for a major overhaul of the Washington law includes clean vehicle guidelines.

(Also read: Are you driving a smart car? Your car might be keeping an eye on you)

Under the $430 billion Climate, Health and Tax bill that the House of Representatives is due to vote on Friday, the rules for the current $7,500 electric vehicle tax credit aimed at helping consumers to buy the vehicles has been replaced by incentives aimed at bringing more battery and EV manufacturing to the United States.

Manufacturers, dealers and consumers don’t have answers to many fundamental questions about how the new regulations will impact the way clean consumer vehicles — including all-electric and hybrid models — are bought, sold and built, automakers, consultants and automakers said lobbyists.

However, industry executives were more positive about the proposed incentives of up to $40,000 per vehicle for larger commercial EVs, such as EVs. B. Semi or electric commercial vehicles from Tesla Inc., which were developed by several manufacturers.

The provisions of the Inflation Reduction Act are “a strong commercial tailwind,” said RJ Scaringe, chief executive of Rivian, which has reached an agreement to deliver up to 100,000 large vans to shareholder Inc.

The legislation brings “in a very short space of time, a significant change in value chain requirements affecting an industry where supply chain evolution is measured…in years,” said John Loehr, managing director of consulting firm AlixPartners.

Only one Volvo model falls under the scope of the new bill. (HT Auto/Sabyasachi Dasgupta)

No longer eligible

The most immediate impact of the Inflation Reduction Act would be a ban on tax credits for vehicles assembled outside of North America. That would mean about 70% of the current 72 electric vehicles and plug-in hybrids in the US market would be out of the question, said the Alliance for Automotive Innovation, which warned that the change could “put customers in the market for a… new vehicle will surprise and disappoint” and “threaten” EV sales targets.

However, US Secretary of Transportation Pete Buttigieg told Reuters in an interview this week: “This will be… a very important long-term transformational policy to accelerate the EV revolution and ensure it’s a ‘Made in America’ EV revolution.” “

“Industry can sometimes do more than meets the eye,” added Buttigieg.

The Biden administration has yet to write and finalize executive orders to address some of the complex issues raised by the rapid tax credit rewrite.

New restrictions on battery and critical mineral sourcing, price and income caps come into effect Jan. 1, potentially making all current EVs ineligible for the full $7,500 credit.

A projection by the Congressional Budget Office puts just 11,000 electric vehicles that could qualify for the tax credit in 2023.

Domestic content requirements will increase over the next six years.

Volvo Car North America said only one of its models that currently qualifies for EV tax credits will still qualify after the bill is signed. The only one that will qualify in the short term is the S60 Recharge, which is being assembled in South Carolina, and even that cannot qualify after January 1st.

Several automakers, including startups Rivian and Fisker, this week began asking potential customers to get off the fence and commit to buying vehicles before the current rules are replaced.

Binding Contract

The bill will allow consumers to still get the credit if they buy before Biden signs the bill, but a “written binding contract” must be in place for the purchase.

In a letter, Rivian encouraged potential buyers to make $100 of their deposits non-refundable in order to qualify for the loan. Rivian executives said customers are ordering R1 trucks and SUVs Thursday at average prices of $93,000 — well above the limits in the proposal before the house.

“We cannot guarantee that the IRS (Internal Revenue Service) will approve eligibility for tax credits when we interpret the terms of the Inflation Reduction Act,” Rivian warned in his letter.

Mercedes-Benz said it is reviewing the proposal in anticipation of the new regulations becoming final next week.

Government officials from the European Union and South Korea said on Thursday they were concerned that domestic content and manufacturing requirements in the inflation-mitigation law could violate World Trade Organization rules.

US electric vehicle leaders Tesla and General Motors Co are already selling their electric vehicles without a federal tax credit because they hit the 200,000 vehicle cap under current law.

Tesla and GM may not be eligible to offer tax credits until January 1 under the new law. And even then, it’s not clear which models — if any — will get the full $7,500 if they meet the requirement that only 40% of battery minerals come from North America or countries the United States has free trade agreements with.

The proposed subsidy limits would hit automakers and battery makers with parent companies in China hardest.

Beginning in 2024, rules will make vehicles ineligible for credit if they contain content from a “foreign entity of concern,” a term that could include Chinese firms.

Initial Release Date: Aug. 14, 2022 5:32 p.m. IST

Leave a Comment