Most electric vehicles won't qualify for federal tax credit
Tax credits of up to $7,500 can be used to repay the cost of an electric vehicle under the Inflation Reduction Act, which is now heading for final approval in Congress.
This is mainly due to the bill's requirement that, to qualify for credit, an electric vehicle must have batteries manufactured in North America in which minerals have been mined or recycled on the continent.
And those rules become more stringent over time — to the point where, in a few years, it's possible that no EVs will qualify for tax credits, says John Bozzella, CEO of the Alliance of Automotive.
As of now, the coalition estimates that about 50 of the 72 electric, hydrogen or plug-in hybrid models sold in the United States will not meet the requirements.
"A credit of $7,500 may exist on paper," Bozela said in a statement, "but no vehicle will be eligible for this purchase in the next few years." "
The idea behind the need is to encourage domestic manufacturing, build a robust battery supply chain in North America, and reduce industry dependence on foreign supply chains.
The production of lithium and other minerals that are used to produce EV batteries is now dominated by China. and the world's leading producer of cobalt, another component of EV batteries.
Under the $740 billion economic package, which passed the Senate over the weekend and is nearing approval in the House, tax credits will take effect next year. to qualify for an EV buyer.