Phew!!! What a relief to see the electric vehicle (EV) tax credits pass through Congress; with President Biden expected to sign them into law through the much larger Inflation Reduction Act of 2022. These $7,500 tax credits had disappeared for all Tesla models and GM electric models after previously reaching their 200,000 unit limits and closing periods — with Toyota heading down that path, too.
Not only that, I was more than pleased to see Plug In America endorse it after the House wrapped up the legislative process on Friday. There was a lot to sift through on the new regulations, with quite a few EVs being excluded.
It had been a close call in the senate with approval from Democratic senators Joe Manchin of West Virginia and Kyrsten Sinema of Arizona; and a tie-breaker from vice president Kamala Harris. The House vote was also split along party lines.
I had my share of doubts, which I tweeted about recently.
I was concerned that, for those consumers and fleets interested in electric vehicle tax incentives, the new law was going to be difficult to sift through — and could be taking away that incentive from EVs they’d wanted to buy.
Automakers and federal regulators will be digging through the legalese to clarify which vehicles qualify for the law and which don’t under the domestic production rules and the the price limitation that was also set; and what to do about the battery packs and the minerals that go into them — most of which come from China.
It includes a new tax credit of up to $4,000 on used EVs, and revised tax credits of up to $7,500 on certain new EVs. Married couples don’t qualify for the new-vehicle credit if their modified adjusted gross income on a joint tax return exceeds $300,000. The limit is $150,000 for single tax filers.
A new mandate has been introduced for qualified vehicles being assembled in North America. It applies to buyers of new “clean” vehicles that includes battery-electric vehicles, plug-in hybrids, and hydrogen fuel cell vehicles. Limitations for eligible EVs are on the purchase price are: no more than $55,000 for sedans and $80,000 for SUVs and trucks.
As for minerals used in qualifying EV battery packs, here’s a look at the structure that will be implemented. It goes by the “percentage of the value” of the applicable battery critical minerals that are extracted or processed in the US, or from a U.S. free-trade partner, or recycled in North America. That annually escalating schedule governing the levels of critical minerals has been included that requires starting with 40% for a vehicle placed in service before Jan. 1, 2024; and goes up to 80% for a vehicle placed in service after Dec. 31, 2026.
A long list of applicable critical minerals is included in the bill, which can be viewed in a Green Car Congress article.
Vehicles not assembled in North America and that will go outside the qualified vehicle list include: the BMW i4, Hyundai Ioniq 5, and Kia EV6; but there will be several more on this list. As for automakers, Audi, Kia, and Porsche have already stated that buyers of their electric vehicles will not qualify for the tax credit. Volkswagen said it will have to work out how to make the ID.4 eligible next year. Higher-priced EVs from Tesla, Fisker, and Lucid Group also will not qualify for the EV tax credit.
Consumer Reports has done a comprehensive analysis of where EVs likely stand on the new list.
Some automakers are complaining that too few vehicles qualify for the new mandates based on what must be built in the U.S. and where their batteries come from — at least where the minerals that make up a lithium-ion battery come from. Many automakers have said that they cannot meet the short timeframes in the bill and their vehicles are unlikely to fully comply for some time. Other makers have complained that several of their EVs no longer comply at all for the credits.
Fleet trucks and vans will get credits
Commercial electric truck makers are in a good place with incentives of up to $40,000 per vehicle providing strong motivation for fleets to look at Daimler’s Freightline Cascasia, Lion Electric’s (LEV) Class 8 trucks, the Tesla Semi, and Workhorse Group’s medium-duty trucks, among others. It provides a purchase incentive of up to 30% to buyers of medium- and heavy-duty vehicle used by fleets and logistics/transport companies, or $40,000, whichever is lower. This bill provides a purchase incentive of up to 30% to buyers of medium- and heavy-duty vehicle used by fleets and logistics/transport companies. The tax credit for commercial fuel cell vehicles is also set at 30% of the price or $40,000, whichever is lower.
On the new tax credit, Rivian Automotive CEO R.J. Scaringe said, “I think…… this is a really important step and I think it’s great for the acceleration of electrification and really providing a path to a carbon-neutral economy. Now in terms of what that represents for us, it’s certainly a powerful tailwind… The incentives are quite strong, the consumer-facing incentives at over – at $40,000. So the – we see this as really helping to drive a rapid transition to electric vehicles in the commercial space.”
$3 billion will be available for U.S. Postal Service vehicles. USPS had requested an extra $3 billion to cover the difference in the upfront cost for EVs and charging infrastructure.
The bill would continue the credit for low-income consumers who install charging in their homes. It will also be expanded for commercial installations.
Vehicle manufacturers will have access to several different tax credits that will help them set up or grow manufacturing of EVs and batteries in the U.S.
Most of the proposed rules go into effect for cars put into service after Dec. 31, 2022 and are valid through 2032. Automakers and other stakeholders will have to clarity another provision that vehicles must be manufactured in North America in order to qualify, which will go into effect as soon as the law is passed and signed by the president. Some of the provisions won’t go into effect until after regulations are finalized.
It’s still not clear about how many EVs will be budgeted for manufacturers to receive these tax refund incentives in the 2023 fiscal year and beyond. Tax incentives will be available through auto dealers at the time of purchase and built into the acquisition price, and by the consumer who purchases the EV and includes that rebate in their next tax filing.
CHIPS and Science Act of 2022
A separate legislative action will also play a big part in supporting production and marketing of even more EVs. On Tuesday. Aug. 9, 2022, President Joe Biden signed a $280 billion bipartisan bill to strengthen domestic manufacturing of semiconductors in an effort to not rely as heavily on overseas production of these important tech components. Officially called the CHIPS and Science Act of 2022, this new bill provides $52.7 billion for American semiconductor research, development, manufacturing, and workforce development, with $39 billion going to manufacturing incentives, $2 billion for chips used in automobiles and defense systems, $13.2 billion in research and and workforce development, and $500 million to provide for international information communications technology security and semiconductor supply chain activities.
The CHIPS Act will also provide a 25 percent investment tax credit for capital expenses for manufacturing of semiconductors and related equipment, $1.5 billion for promoting and deploying wireless technologies that use open and interoperable radio access networks, $10 billion to invest in regional innovation and technology hubs across the country, as well as various other science-related investments.
“Thank you to the leaders who made the CHIPS Act a reality to strengthen American supply chains, especially for legacy chips needed in auto and defense,” said Jim Farley, CEO at Ford Motor Co., via Twitter, on the day it was signed by the president. “This bipartisan law will help Ford and the U.S. innovate, create jobs, build EVs customers love, and compete on the global stage.”
How important is the semiconductor to EVs? “Semiconductors are a keystone technology in the energy sector as they are essential for the operation of nearly every electric vehicle, recharging station, and wind turbine as well as the entire electrical grid,” according to the U.S. Dept. of Energy’s Semiconductor — Supply Chain Deep Dive Assessment, published earlier this year.
And in other news………
EV subscription company offering Teslas and more: Autonomy, the nation’s largest electric vehicle subscription company, placed an order for 23,000 electric vehicles with 17 global automakers to expand and diversify its subscription fleet beyond Tesla. The fleet order is valued at $1.2 billion. With many automakers going all-in on electric vehicle launches, and so many exciting new products coming to market in the next six to 18 months, the company placed its fleet order, and is excited to expand its subscription lineup and make it easier for consumers to make the transition to electric., said Scott Painter, founder and CEO of Autonomy. Autonomy’s order was placed with the fleet departments of these automakers: BMW, Canoo, Fisker, Ford, General Motors, Hyundai, Kia, Lucid, Mercedes-Benz, Polestar, Rivian, Stellantis, Subaru, Tesla, Toyota, VinFast, Volvo, and Volkswagen.
Diesel truck and airplane solutions: U.S. Department of Energy’s (DOE’s) National Renewable Energy Laboratory (NREL) say that test results are looking good from bio-based feedstocks including woody biomass residues, agricultural residues, algae, and municipal solid waste as renewable sources for production of new fuels is looking good for diesel trucks and airplanes. It would mean a GHG emissions reduction of
60% to 84%, respectively.
Two big charging company acquisitions: Late June saw two major acquisition deals in the charging space. On June 21, Blink Charging Co. announced the acquisition of SemaConnect, Inc., a leading provider of EV charging infrastructure solutions in North America, for a combination of cash and shares of its common stock. The transaction added nearly 13,000 EV chargers to Blink’s existing footprint, an additional 3,800 site host locations, and more than 150,000 registered EV driver members.
The next day, French energy management and automation company Schneider Electric acquired EV Connect, a California-based EV charging solution provider. EV Connect serves customers across 41 states in the U.S., including GM, Avista Utilities, Love’s Travel Stops, Verizon, Marriott, Hilton, Western Digital, ADP, New York Power Authority, and numerous municipalities.
