Members of the House of Representatives will return to Washington on Friday to vote on the Inflation Control Act, the Democrats’ broad climate, tax and health bill. The measure includes $369 billion to address climate change, the largest such investment in US history.
However, a key part of the bill – the electric vehicle tax credit – has raised concerns from an expert who fears it will not go into effect.
what you need to know
- Industry insiders warned that a provision in the Anti-Inflation Act that provides tax credits for electric vehicles may not apply
- Electric vehicle tax credits are a key part of the bill, which aims to inspire more people to give up their gas-powered cars and switch to cleaner vehicles.
- One expert has warned that a rule dictating where auto parts must be manufactured could result in most EVs being ineligible for the loan.
- The White House says the ban is aimed at boosting domestic production and reducing reliance on external supply chains
Electric vehicle tax credits are a key part of the bill, which aims to inspire more people to give up their gas-powered cars and switch to cleaner vehicles. The bill provides a tax credit of up to $7,500 for new fixed-price EVs and up to $4,000 for used EVs through 2032.
Loans are made available to couples earning up to $300,000 and singles earning $150,000 or less. Truck or SUV owners who paid more than $80,000 for cars over $55,000 would not qualify for the tax credit.
However, an industry expert says most electric vehicles are not eligible for a loan under the program, mainly because of a requirement that requires the car to be disassembled. The bill requires electric vehicles to contain batteries manufactured in North America, in which minerals are mined or recycled on the continent.
John Bozzella, CEO of the Alliance of Automotive Innovation, a leading industry trade group, said in a statement to the Associated Press, “The $7,500 loan may exist on paper, but no vehicle will qualify for this purchase for years to come.” to qualify.” “,
Most EV manufacturers currently do not have the production capacity or resources for the minerals. China, which the US and surrounding countries view as a geopolitical threat, currently dominates global supply chains in this region. The bill excludes tax credits for new vehicles whose battery material or other components have a manufacturing relationship with a “foreign entity” of the group, including China.
Jay Turner, a professor of environmental studies at Wellesley University, warns that “many of these vehicles are not eligible for the loan in the short term.”
He told Spectrum News, “What’s going to make a difference is it depends on how quickly automakers can scale their supply chains — and there’s good reason to think they might not offer that big of a subsidy.”
Turner said if they push back the deadline for these changes, it will create a better situation.
The White House says the ban is aimed at boosting domestic production and reducing reliance on external supply chains.
“This is an opportunity to make sure businesses are reaching out to American workers,” Gina McCarthy, the White House national climate adviser, told Spectrum News.
“This bill has many gifts and benefits, but also enormous opportunities. And I’m sure the electric vehicle community can achieve that,” McCarthy said.
The Associated Press contributed to this report.