The Inflation Reduction Act (IRA) has a huge number of clean energy and clean transportation focused components to it. Watch Kate from Transport Evolved share some highlights of the recently passed IRA and specifically how it will impact buying an electric vehicle (EV) in the U.S.
New changes impacting EVs
The IRA has several new guidelines impacting EVs and they’re not straightforward like some others. Some highlights include:
Income and price caps
With the passing of the IRA, both your income and the cost of the EV you’re buying now impact tax credit eligibility. Some critics are claiming that the income and price caps are a terrible change, but Transport Evolved points out that it does open up some options for used EVs and lower income consumers as well as potentially encourage manufacturers to continue to offer lower priced EVs.
One notable theme in the IRA is that it is written to help the U.S. grow into a hub for manufacturing clean energy solutions like EVs and batteries. Now, in order to get the EV tax credit, final assembly of the vehicle must happen in North America.
However, the origin of assembly for EVs is not always straightforward to determine. Kate brings up that the nuances on manufacturing location of various parts for EVs is likely to lead to consumer confusion. (Note: we’ll keep covering this topic to help you navigate any upcoming EV research and purchase!)
Some vehicles have models made in different locations, so even within the same make and model, it could be hard to discern if the EV you’re purchasing qualifies for certain tax credits and how much you’ll get. You can see a list of which EVs are likely to qualify via the Department of Energy (DOE) and check the specifics based on the Vehicle Identification Number (VIN) to see if the specific EV you’re looking to buy is eligible.
Changes in which EVs are eligible for the tax credit
Unfortunately, this change in the credits available based on where the car is assembled means there is a reduction in the overall number of EVs available today with the IRA signed into law — no Kia, BMWs, or Hyundais are eligible now. Notably the Hyundai Ioniq and Kia EV6, which have been top-selling EVs in 2022 no longer qualify for the tax credit.
However, some other EVs like Tesla’s Model 3 and Model Y will qualify again in 2023 after not being eligible based on the previous manufacturer-specific sales cap. That is, as long as they don’t exceed the vehicle price cap of $80,000 for vans, pickup trucks, and SUVs (Model Y) or $55,000 for cars (Model 3). No Tesla Model S or Model X vehicles will qualify, though, because of their price tag.
What is still great about the IRA?
Despite some of the confusing or potentially controversial components of the law, there are several positive impacts projected from the IRA. First, Transport Evolved cites that a recent independent analysis suggests the law will actually help reduce the federal deficit by $260 billion even though there’s added spending involved. The U.S. passing this law to help reduce fossil fuel usage in the states may be a sign of similar progress happening elsewhere around the globe. Plus, making steps to help curb climate change is always a good thing.
Power your EV with solar
If you do go electric when it comes to driving, charging your EV is usually much less expensive than buying gas. And if you go solar, it’s even more affordable to charge your EV at home! Compare several solar quotes from pre-screened installers on the EnergySage Marketplace to find the best option that fits your needs (at the right price). As you’re getting quotes on solar costs, just let installers know that you’re planning to charge an EV at home so they can help you ensure you have enough energy to power your car with renewable energy.
Editor’s note: EnergySage sponsored this video from Transport Evolved, which appears on their YouTube Channel.