New bill aims to make all electric vehicles in the US immediately eligible for federal subsidies
Several members of Congress have co-sponsored a bill that suspends the stringent requirements that automakers have to comply with in order to make their electric vehicles eligible for the US$7,500 US tax credit reintroduced with the recent Inflation Reduction Act. Filed by Congresswoman Terri Sewell, the so-called Affordable Electric Vehicles for America Act aims to basically postpone all made-in-US eligibility requirements by three years. According to Representative Emanuel Cleaver (MO-05), one of the bill's co-authors:
Our legislation takes important steps to make the historic electric vehicle tax credits passed in the Inflation Reduction Act immediately accessible to consumers, particularly working- and middle-class Americans who would like to purchase an electric vehicle but need the federal credit to do so. As oil companies insist on continuing their exorbitant price-gouging of American families at the pump, these tax credits offer hardworking Americans immediate and significant financial assistance to help them purchase a vehicle that is better both for the environment and their wallets. This bill would be a major win for consumers, auto-workers, and businesses alike, and I will work with my colleagues to ensure it is signed into law by President Biden.
The enforcement delay is in order to give equal opportunity to all EV makers to reorganize their manufacturing base for compliance while their current models remain eligible for subsidies. The new Affordable Electric Vehicles for America Act bill asks for putting all made-in-America and other subsidy requirements off by three years:
(a) FINAL ASSEMBLY.—Subparagraph (G) of section 30D(d)(1) of the Internal Revenue Code of 1986, as added by section 13401(b) of Public Law 117-169, is amended by inserting ‘‘in the case of any motor vehicle sold after December 31, 2025,’’ before ‘‘the final assembly’’.
With the current requirements, the Tesla Model 3 and Model Y will only become eligible after January 1, 2023, for instance, while some manufacturers like Hyundai that sell very popular electric vehicles won't qualify at all as their current units on the market aren't assembled in the US.
Ever since the Inflation Reduction Act became law, automakers and battery manufacturers alike have been trying to move production to the US, announcing new factories and joint ventures that will be based in America at a frantic pace.
Tesla's Korean battery suppliers, for instance, reportedly started to clean their supply chain from Chinese components or raw materials that would make their cells ineligible for the new EV subsidy spree that will run until 2032. Tesla itself has expressed interest in building its own lithium refinery on the Gulf Coast so as to ensure a steady subsidy-compliant supply of the critical battery material.
All these investments in a new manufacturing base or retooling of existing factories will, however, take time to complete, and that's what the new Affordable Electric Vehicles for America bill will try to account for by making all EVs in the US immediately eligible for the government's tax credits.
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