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Business

What the EV tax credits in your IRA bill mean for you




In the short term, changes to the EV tax credit will likely “eliminate many vehicles from being eligible,” Harto said.

For example, he noted, cars not assembled in North America are expected to be immediately excluded. Currently, such vehicles may include those from Hyundai, Kia and Toyota, among others, according to Consumer Reports.

Other car models, regardless of where they are assembled, would not qualify because they are too expensive. To be eligible for a credit, new electric vehicles that are vans, SUVs or pickups cannot exceed $80,000, while other types of vehicles cannot cost more than $55,000. Used electric vehicles can be eligible if they cost no more than $25,000 .A list of cars compiled by Consumer Reports that likely won̵[ads1]7;t qualify because of the price tags includes some Teslas, several BMWs and other models depending on the vehicles’ modifications.

In the long term, however, the new EV incentives “will likely be a massive improvement over the existing tax credit system,” Harto said. “It will really help middle-class Americans to be able to afford EVs. They may just have to wait a couple more years” for automakers to adapt to the new requirements and vehicle supply increases.

And while the new production requirements may be “a high bar to clear,” the existing vehicle cap likely already made it difficult for many people to buy popular electric cars that would be eligible for the tax credit, said Leah Stokes, an associate professor of environmental policy at the University of California in Santa Barbara. “A current EV tax credit basically doesn’t exist for the majority of EVs that Americans buy,” Stokes said, noting that several manufacturers of popular vehicles have hit the sales threshold.

Also, one aspect of the EV market is likely to remain unchanged, regardless of the tax law in place, Foley said: Each year, “some cars will be eligible, some won’t.”

“Right now it’s because of the cap on individual companies,” he said. “In the future, it may be who has the batteries that meet the standard.”



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