Under a potential bill in Congress, electric vehicles that were initially not qualified for the federal credit due to the Inflation Reduction Act may regain eligibility in the upcoming year.
The Affordable Electric Vehicles for America Act, recently introduced in both chambers of the U.S. legislature, proposes extending the deadlines for battery sourcing and manufacturing requirements until the end of 2025, a delay of three years from the original IRA stipulations.
“Our bill aims to make the electric vehicle tax credits from the Inflation Reduction Act more accessible immediately to consumers, particularly those in the working and middle classes who rely on the credit to afford an electric vehicle,” stated Representative Emanuel Cleaver, a Democrat from Missouri.
Upon its enactment, the IRA rendered many electric vehicles ineligible for the prior tax credit. Specifically, electric cars from brands such as Hyundai, Kia, Audi, and Volkswagen were excluded due to either being produced outside North America or utilizing battery components from non-qualifying countries. In response, General Motors CEO Mary Barra mentioned that it could take up to nearly three years to qualify the Chevrolet Bolt EV, a notable affordable electric vehicle manufactured in the U.S. by a traditional American automaker, for the revised tax credit.
Following the IRA’s implementation, several automakers like BMW, VW, Hyundai, Kia, and others have announced substantial investments in battery production facilities in North America and adjusted their manufacturing strategies to comply with the regulations. However, as most of these facilities won’t be operational for a few years, the bill proposes a delay in some IRA requirements to facilitate compliance. The current IRA framework sets the expiry of EV incentives in 2032.
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