Electric car incentives 2023
Recently passed legislation in the US has created updated requirements for tax credits for electric vehicles, but a much-overlooked factor in the law includes its incentives for battery manufacturing. Huge federal investment in domestic battery manufacturing is expected to lower production costs in the coming years, making electric cars more affordable and appealing to consumers Electric car incentives 2023.
Above: An EV charging station (Image: Michael Fousert / Unsplash) Electric car incentives 2023.
The Biden administration’s tax breaks for electric cars are going better than some analysts expected, as part of the White House’s larger plan to boost domestic electric car manufacturing, according to a recent report from Axios . The report looks at what President Biden and congressional Democrats pushed for in the Inflation Reduction Act, which included upgraded incentive guidelines that prioritize U.S. automakers and several new investment opportunities for EV battery makers in the country Electric car incentives 2023.
While the $7,500 federal EV tax credit has given many buyers a chance to buy American EVs at a bargain, the IRA’s guidelines for domestic battery manufacturing could stand to push the industry forward just as well.
This year alone, Tesla expects to earn as much as $1 billion in battery tax credits, and CEO Elon Musk has previously said those credits could be ”very significant” and even ”gigantic” in the coming years. One of the main incentives from the IRA includes $35 per kWh for each US-made battery cell – effectively cutting production costs in half Electric car incentives 2023.
For example, a manufacturer producing 70 kWh batteries for one million vehicles would provide $2.45 billion per year from the credit. As another example, Tesla’s Nevada Gigafactory expects to produce as many as 100 GWh of battery cells per year in the near future, before increasing to 500 GWh down the road. At an annual rate of 500 GWh, the new credits would represent roughly $17.5 billion annually Electric car incentives 2023.
EV batteries are expected to soar in the US as the country tries to reduce its dependence on the supply chain to China. By 2022, companies announced over $73 billion in plans for U.S. battery factories, according to data from Atlas Public Policy.
Electric car incentives 2023
”We’ve already seen hundreds of billions of dollars in new private sector investment in clean energy industries, including batteries, electric vehicles and solar panels,” White House Assistant Press Secretary Michael Kikukawa told Axios .
”No one should be surprised that the historic Inflation Reduction Act will lead to an explosion in new EV plants that will showcase how American workers are the best in the world,” Kikukawa added.
Ford CEO Jim Farley estimated a ”big increase in annual credits,” with the automaker expecting as much as $7 billion in tax credits between 2023 and 2026.
While tax breaks for buyers will help push mainstream EVs on the ground, battery incentives that bring manufacturing to the U.S. could be just as important. And as most legacy automakers race to keep up with Tesla, the automaker is already one step ahead of future sales bans on gas cars because its lineup doesn’t include any vehicles with internal combustion engines.