What the Cut Inflation Act Means for Buyers of Electric Cars and Trucks

There’s a new IRA in town and it has nothing to do with retirement savings. It’s the Cut Inflation Act, which is essentially Joe Biden’s Build Back Better proposal, but with a new name and a significantly lower price tag. There’s a lot to like here – assuming it becomes law. For reasons that elude most people of normal intelligence, Republicans refuse to lift a finger to meet the needs of a hot planet and so it will take all 50 Democrats in the Senate plus the vote of Vice President Kamala Harris. to move this bill forward. line.

We know what that means, don’t we, boys and girls? That’s right — massive concessions to each of those senators who want to be able to tell all of their constituents that they brought home the bacon. Expect a ton of pork to be loaded into the final bill before it passes. But that’s politics. If you don’t like it, change the system.

The name of the new Inflation Reduction Act is an essential part of the packaging. Build Back Better was seen as a big government goodie bag — you know, the usual socialist crap the feds are famous for. But everyone is in favor of lower inflation, it doesn’t matter that much of current inflation is directly linked to the trillions of dollars pumped into the economy to deal with the effects of the Covid pandemic by government first. It’s politics. It doesn’t have to make sense.

The Inflation Reduction Act and Electric Cars

Of primary interest to Clean Technica Readers will be the IRA provisions that affect electric cars. Probably the most important change is the one we’ve been advocating for a long time. No more ceiling of 200,000 vehicles per manufacturer. Gone also is the cumbersome, inefficient and downright stupid federal tax credit. Instead, the new incentive program will be applied at the time of purchase, meaning it will directly reduce borrowing costs for new car buyers. The new incentive will apply to every eligible electric car until December 31, 2032.

“Qualify” needs a little explanation. First, the maximum selling price is $55,000 for a sedan or wagon, but $80,000 for an SUV or a truck. Exactly what an SUV is can get a bit slippery. The criteria are determined by the EPA and as CNN explains, current EPA guidelines allow certain vehicles that look like a wagon – like the Subaru Outback – to be classified as an SUV, while similar vehicles like the Honda HR-V and Nissan Rogue Sport are considered like compact wagons. The difference is ride height. Expect future electric models to gain an inch or two of ground clearance in order to be classed as an SUV.

There are also income limits for buyers, which are simple – $150,000 taxable income for individuals and $300,000 taxable income for married couples filing jointly. (How long before the right asks for clarification on what the definition of “married couple” should be?)

There are some national content provisions. Originally, cars made in Canada were excluded, but now they are not, according to Engadget. There is no specific mention of Mexico, which seems odd. Several electric vehicles sold in the United States are manufactured south of the border or have components manufactured there. Details are yet to come.

The new bill is designed to promote American competitiveness, particularly against “you know who.” This means that the incentives are tied to vehicles whose major components – like batteries – are not made in China. According Market watchto be eligible, they must be built with materials such as lithium and cobalt that are mined or processed in a country with which the United States has a free trade agreement.

The batteries themselves must be largely manufactured or assembled in North America. This provision may have a particular impact on CATL, which is the largest battery cell manufacturer in the world, but does not currently have a presence in North America.

The original bill proposed by the Biden administration provided additional incentives for vehicles built by union workers, but that provision was dropped in the IRA at the insistence of Joe Manchin, who likes the money flowing from Toyota, which has a manufacturing presence. in West Virginia.

The used car incentive

Three out of four cars sold in America each year are used. A few states like Colorado offered incentives for buying used electric cars, but there were no federal incentives — until now. The IRA adds a $4,000 rebate for used electric cars, provided they are sold by an authorized dealer. The discount can only be applied once to a particular car. The new law appears to exclude Tesla, which sells its used inventory directly to consumers. “It’s something we’ve always said, it’s a dormant issue,” Andres Hoyos, vice president of the Zero Emission Transportation Association, told Bloomberg Green. “It’s going to be a game-changer for mass adoption.”

Electric bikes have a cold shoulder

Unfortunately, the Cut Inflation Act does not offer any incentive to those who buy an e-bike, which the industry had been hoping for. For e-bike advocates, focusing transport incentives exclusively on electric cars is an inefficient way to achieve climate goals. “It just continues to support self-centeredness and doesn’t help change the mode,” said Noa Banayan, director of federal affairs at People for Bikes. Bloomberg Green.

Despite his disappointment, Banayan said the bill was a significant step forward for broader climate action and included potential benefits for cyclists, such as $3 billion in funding for neighborhood access and equity grants that can be used to build and repair bike lanes, footpaths and sidewalks.

Takeaway meals

Bill McKibben has an interesting take on Joe Manchin and why he decided to join the Inflation Reduction Act. “If you want to know who changed Manchin’s mind, you did,” he wrote. “But mostly it was, I think, the widespread contempt from the public. Somehow it started to dawn on Manchin that the only thing history would ever remember about him is that he blocked action on the worst crisis humans have ever faced.

We at Clean Technica have been part of this public scorn and we have our readers to thank for making it possible.


 

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