DETROIT — A U.S. tax credit of up to $7,500 could be used to defray the cost of an electric vehicle under the Inflation Reduction Act now moving toward final approval in Congress. But the auto industry is warning that the vast majority of EV purchases won't qualify for a tax credit that large.
"The $7,500 credit might exist on paper," Bozzella said in a statement,"but no vehicles will qualify for this purchase over the next few years." Under the $740 billion economic package, which passed the Senate over the weekend and is nearing approval in the House, the tax credits would take effect next year. For an EV buyer to qualify for the full credit, 40 per cent of the metals used in a vehicle's battery must come from North America. By 2027, that required threshold would reach 80 per cent.
Automakers generally don't release where their components come from or how much they cost. But it's likely that some versions of Tesla's Model Y SUV and Model 3 car, the Chevrolet Bolt car and SUV and the Ford Mustang Mach E would be eligible for at least part of the credit. All those vehicles are assembled in North America.
One component of the bill would require that after 2024, no vehicle would be eligible for the tax credit if its battery components came from China. Most vehicles now have some parts sourced in China, the alliance said. Stabenow said she remains hopeful that the Biden administration can offer the tax credits next year while it works on the detailed rules for the battery requirements.