US incentives for electric vehicles could be significantly expanded via new Senate bill
A bill has been introduced in the Senate called the “Affordable Electric Vehicles for America Act” that would significantly change the Inflation Reduction Act’s electric vehicle incentive requirements.
Under the current Inflation Reduction Act (IRA), electric vehicles are only eligible for federal tax incentives if they are assembled in North America. However, Senate Bill S. 5020 would remove this requirement and significantly increase the number of vehicles eligible for federal incentives. The bill also adjusts the timeline for manufacturers to switch to US-sourced battery materials.
The “Affordable Electric Vehicles for America Act” (AEVAA), introduced by Sen. Raphael Warnock (D-GA), was likely touted as a wave of criticism from governments and international companies even has surrounded the IRA’s EV incentives since the law was passed earlier this year. Specifically, the leaders of France, Germany, EUSouth Korea and Japan called on the United States to reconsider policy or enter into negotiations with the respective groups.
The other notable change regarding the international backlash relates to the supply of battery materials. Under the current Inflation Reduction Act, companies would be required to use an ever-increasing percentage of US-sourced battery materials to continue to access EV incentives in years to come. The AEVAA bill would push back most of the timelines for this requirement by 1 to 3 years.
So far, those calls for change or negotiation have seemed to fall on deaf ears in the Biden administration, with the president yet to respond to the complaints.
Contacted by Teslarati, the embassies of France and South Korea declined to comment on the new bill. However, the embassies of Japan and Germany have clarified their respective governments’ positions on the IRA, and this new bill (AEVAA) may contribute to a diplomatic solution.
“TThe electric vehicle tax credit requirements,” says the Japanese government, “are inconsistent with the joint policy of the U.S. and Japanese governments to work with allies and like-minded partners to build power chains. resilient supplies. In addition, according to the statement, “limiting the range of vehicles benefiting from the electric vehicle tax credit will reduce the options available to US consumers at affordable prices.” The position of the German representative was quite similar, and although they made it clear that they were aware of the new bill, they did not have a specific comment ready at the time.
Interestingly, in the comments from the Government of Japan, they don’t suggest completely removing the “final assembly” clause, instead suggesting that “measures should be taken, including a flexible interpretation of the definitions of “final assembly” and “North America”…” potentially allowing [Japanese] businesses to circumvent IRA requirements.
With the recently completed elections now leaving a divided government, the future of the AEVAA bill is unclear. Nonetheless, the pressure Washington is currently facing from other national governments could eventually force a change to the original IRA incentive structure for electric vehicles.
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