Electric Cars Excluded From New EV Credit Would Be Eligible Again Under Proposed Bill

A bill in Congress would delay some battery sourcing requirements by three years to allow more cars to qualify for the federal credit.

byAaron Cole| PUBLISHED Nov 8, 2022 11:52 AM
Electric Cars Excluded From New EV Credit Would Be Eligible Again Under Proposed Bill

Electric vehicles initially not eligible for the entire federal credit under the Inflation Reduction Act passed this year may become eligible next year if a bill in Congress passes.

The proposal, called the Affordable Electric Vehicles for America Act, was introduced last week in the U.S. House and Senate and would delay the phase-in requirements for battery sourcing and manufacturing requirements to the end of 2025, three years later than the IRA initially required. 

“Our legislation takes important steps to make the historic electric vehicle tax credits passed in the Inflation Reduction Act immediately accessible to consumers, particularly working- and middle-class Americans who would like to purchase an electric vehicle but need the federal credit to do so,” Missouri Democratic Representative Emanuel Cleaver said in a statement. 

When it was passed, the IRA disqualified many electric vehicles eligible for the previous tax credit. Namely, electric vehicles from automakers such as Hyundai, Kia, Audi, and Volkswagen were removed from the eligibility lists because they either weren’t assembled in North America or had battery components sourced outside eligible countries. In fact, General Motors CEO Mary Barra said it would take nearly three years to make the Chevrolet Bolt EV—the poster child for an affordable electric vehicle assembled in the U.S. by a traditional U.S. automaker—eligible for the new tax credit. 

Since the IRA’s passage, several automakers, including BMW, VW, Hyundai, Kia, and others have announced significant investments in battery plants in North America and shifted production plans to move EVs to comply with the rule. Most of those facilities wouldn’t become operational for several years, perhaps prompting the proposal to delay some requirements of the IRA to let those automakers comply. In the IRA, the EV credits would fully expire in 2032.

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