Senate Democrats passed the Inflation Reduction Act granting $20 billion to invest in manufacturing more electric vehicles.
New Inflation Reduction Act 2022 allocated $370 billion toward climate change and energy projects targeting to lower carbon emissions by roughly 40% by 2030.
The bill included a large portion of the funds to fight against climate change. The climate bill will help save 1.9 trillion dollars in two decades.
GM, Tesla, and Toyota (among other automakers) are expected to benefit from the expansion of a $7,500 EV tax credit included in the deal.
Biden and Democrats successfully marked a significant win by passing the inflation reduction act before November’s midterm election.
15 Reasons the Inflation Reduction Act will help the EV market grow
We discussed the tax credit benefits for Electric Vehicles in an earlier article – Tax Credit For EV, but the bill was not passed then. The release of the Inflation reduction Act on 12 August, Friday and its coming into effect will impact the EV market significantly.
The reforms in the climate bill will boost the EV market in the coming years.
Electric Vehicles and clean energy are the future. I collated 15 reasons under three categories as a part of the Inflation Reduction Act 2022.
American Energy Security and Domestic Manufacturing Bill
This bill will support producing cleaner energy and enhance the reliability of clean energy by making investments in American clean energy manufacturing projects.
1. Large allocation for Clean Energy:
Over $60 billion was allocated for the supply chain of clean energy and transportation technologies.
2. Cheaper Electric Vehicles:
Clean energy and vehicles will become cheaper due to these manufacturing incentives, bringing down inflation and reducing the risk of future price shocks.
3. Production Tax Credit:
A tax credit of an estimated $30 billion will be funded in accelerating U.S. manufacturing of solar panels, wind turbines, lithium-ion batteries, and critical minerals processing.
4. Tax credits to build clean technology manufacturing facilities:
The bill would provide $10 billion in investment tax credits to build clean technology manufacturing facilities, like facilities that make electric vehicles, wind turbines and solar panels.
5. Allocation towards critical minerals
$500 million has been allocated through the Defense Production Act for critical minerals processing along with heat pumps.
6. Preserving Automotive Jobs
The goal is to preserve automotive jobs by providing $2 billion in grants to rebuild existing manufacturing facilities to produce clean vehicles.
7. Promoting Clean Vehicle Factories:
$20 billion in loans to build new clean vehicle factories nationwide.
Lower Consumer Energy Costs
8. Consumer tax credits
A period of 10 years of consumer tax credits to make electric HVACs more affordable and clean energy production.
9. Tax Credit for buying New Electric Vehicle
The bill granted a $7,500 consumer tax credit to buy new clean vehicles.
10. Tax Credit on Used Clean Vehicles
The IRA includes a tax credit for low- and moderate-income individuals to make Used Clean Vehicles affordable. This credit may be taken as a point-of-sale rebate, reducing the cost by as much as $4,000 to make used electric and hydrogen cars more accessible.
Bill to decarbonize the economy
11. Loan Programs to help electric utilities
The plan also includes about $30 billion in grant and loan programs to help electric utilities and tax credits for clean energy.
12. Tax Credit for clean fuels
Tax credits and grants are available for clean fuels and clean commercial vehicles.
13. Investment in American-made clean technologies
The bill granted $6 billion for purchasing American-made clean technologies through federal procurement, creating a stable market for clean products.
14. Zero-emission vehicles for Postal Service
The Postal Service would receive $3 billion to purchase zero-emission vehicles.
15. Promoting zero-emission equipment and technology
The Inflation Reduction Act under decarbonised economy initiative grants $3 billion for the purchase and installation of zero-emission equipment and technology to reduce Air pollution at ports.
Data Source: Senate Democrats site. https://www.democrats.senate.gov/inflation-reduction-act-of-2022
The Inflation Reduction Act is climate-focused and determined to progress towards a green economy. Large allocations to fight against climate change and produce clean energy will significantly change the course of the US economy, impacting the environment massively.
Impressive reforms and supportive changes in the Inflation reduction Act will encourage more Americans to buy electric vehicles, and demand for the EV market will increase.
The incentives in IRA 2022 will not only help the EV market grow but will also increase demand for Lithium-Ion batteries, electrolytes, steel, tires, lithium and other electric appliances. Eventually, this process will attract competition and make clean energy affordable.
What do you think? Share your thoughts on the Inflation Reduction Act 2022.