“We can’t currently meet the demand,” says auto industry rep. of new EV tax credits

Published: Aug. 26, 2022 at 11:57 AM EDT
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WASHINGTON (Gray DC) - The Biden administration wants half of all cars on the road to be electric by 2030.

The price for an average new electric vehicle is $66,000 dollars according the Kelley Blue Book. One goal of the new Inflation Reduction Act is to make electric cars more affordable, thanks to tax credits.

The new car credit will offset up to $7,500 of a new electric vehicle’s cost.

Transportation Secretary Pete Buttigieg says the credit is meant to help middle income families make the jump to electric.

Buttigieg said, “if you make millions, you won’t be eligible for this tax credit. Again, i think you’re going to be just fine.”

Some vehicles are eligible for the credit now, but that might change starting January 1st, 2023. The Inflation Reduction Act will add new regulations on sourcing and assembling batteries for electric cars, which the auto industry says will be a big problem.

The Alliance for Automotive Innovation is an industry group which represents most of the largest American and foreign car companies.

The group’s president, John Bozzella, wrote in an August blog post,The $7500 credit might exist on paper, but no vehicles will qualify for this purchase incentive over the next few years.”

The group unsuccessfully urged Congress to phase-in the battery component requirements gradually.

Bozella also wrote, “While we work to unlock supplies of critical minerals and ramp up battery production at home, we can’t currently meet the demand for these materials on our own. That’s the reality.”

Senator Joe Manchin (D-W.Va.), who worked on the new law’s legislative framework with Democratic leaders, defended the requirements. After the bill’s signing by President Joe Biden, Manchin said his bigger goal with the legislation was to building the American supply chain.

“I’m not I’m not a fan of the credits, okay. I’m a fan of basically building a supply chain here,” Manchin said. “We went into basically making sure that used cars, used EVs would get $4000. So that was the thing we compromised on.”

Niskanen Center climate policy expert, Kristin Eberhard, say the smaller $4,000 credit for used electric vehicles may be leaned on more until the auto industry catches up with the new car requirements.

Eberhard said, “So it could be that there’s more activity in the used EV market starting next year as people realize they can’t get the one that they want for the, you know, with the new subsidy.”

Resources:

Department of Treasury FAQs

List of qualifying electric vehicles

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