The US Congress Passes Inflation Reduction Act changed the formula to allow tram buyer to claim a federal tax credit. While it removed a limit on the number of vehicles a manufacturer could sell before it was no longer eligible for the credit, it created a series of production and content restrictions that some manufacturers Automakers have been competitive since the ink dried. The most debated IRA elements in this regard are:
- Vehicles will need to be made with minerals mined or processed in a country The United States has a free trade agreement with. The minimum amount starts at 40% in 2023, increasing by 10% annually.
- The vehicle must have a the battery includes a large percentage of components manufactured or assembled in North America. Next year, this means at least 50% of the value of components, increasing by 10% every year.
- The agreement limits the suggested retail price of eligible vehicles to $55,000 for new car and $80,000 for pickups and SUVs.
Once an OEM meets the first two requirements, their electric vehicle buyers can claim the full $7,500 credit for up to 10 years after eligibility begins. If an OEM only meets the 50% battery production part, their electric vehicle buyer can claim $3,750. There will be a pause on wide-ranging full tax credits while automakers decide their production plans and establish qualifying supply arrangements for them, after there build facilities and get materials on ships and trains.
GM has announced all year about building such infrastructure. Search Alpha posted a transcript of GM’s Q3 earnings call in which CEO Mary Barra presented a timeline for meeting both conditions. “Based on our expectations with the offering moves we’ve made,” Barra said, “some vehicles will be eligible for the $3,750 credit starting January. and then we’ll ramp up qualifying in the broad portfolio over two to three years as a number of different supplies come online in North America or in the United States.
GM plans to roll out 30 new EVs by 2030, and within two years from now expects at least six below the MSRP threshold depending on whether they’re classified as an automobile or an SUV – Cadillac Lyriq , Chevrolet Equinox EV, Blazer EV, Silverado EV, a Chevrolet EV underneath the Equinox could be a replacement for Bolts and entry-level details of the GMC Sierra EV. There may be a smaller, less expensive GMC Hummer EV Ultimately, we still don’t know where the upcoming Buick EV will land, nor when the Cadillac Optiq and Symboliq will arrive. The new EVs based on the previous Ultium were too expensive to qualify.
Barra notes that the commercial component of discount will be important because of GM’s BrightDrop valve division. “We also think there’s a significant opportunity to potentially take advantage of a tax credit of up to $45 per kilowatt-hour for cells and battery modules made in the US,” she said. . “I think we’re better positioned than most because of our aggressive plan to get battery and pack assembly plants in this country.” The Ohio automaker’s Ultium cell plant in partnership with LG went live earlier this year, with another set to run annually as GM moves toward its goal of 1 million units of capacity. annual EV production in North America by 2025.
Via Ford, CEO Jim Farley told analysts“Next year, we believe we will meet the $3,750 critical mineral credit claim on select Mustang Mach-E and F-150 Lightning models. In year 24, the rules will be more restrictive. more credit for this important material, so we believe it’s a level playing field right now for all OEMs because our supply chain includes important minerals that are mined or processed in the United States and [the Free Trade Area] develop. “He’s also very concerned about the potential for commercial discounts, calling it ‘super important to Ford’ and saying, ‘Ford is number one. Commercial vehicle brands in the United States and our commercial customers can now claim $7,500 for every EV they buy next year with no restrictions on battery supply or production. Our rough estimate is that between 55% and 65% of our total commercial vehicle customers will be eligible. “