The Inflation Reduction Act of 2022 currently under discussion in Washington would spend $369 billion on climate change and energy security, including big changes to electric-vehicle tax credits. If it passes, of course.
What matters to car shoppers is that there’d be more money for more electric vehicles: gone would be the 200,000-per-automaker limit, which GM, Tesla, and Toyota have already reached. Used vehicles would also qualify for a $4000 credit, for the first time.
The bill would also encourage automakers to use batteries that are sourced and assembled in North America, limiting the value of importing EVs from China.
The surprise political revival of some parts of the Build Back Better plan brings with it the potential for massive federal action on climate change, drug costs, and corporate taxes. Now packaged as the Inflation Reduction Act of 2022, or IRA, the bill would reduce the federal deficit by over $300 billion, according to President Joe Biden.
It’s the estimated $369 billion in the IRA that addresses climate change and energy security spending that will have a direct effect on the vehicles we buy and drive. The text of the bill is not yet final, and the Senate has not yet voted on it, but we can at least look at what would change in the automotive world if it passes as it is. Here’s a summary of how the IRA would affect the lives of car buyers. In short, middle- and low-income buyers benefit, as do automakers who build their EVs in North America.
Changes for Buyers
The biggest change for the auto industry is that the IRA revamps how federal electric-vehicle tax credits work. Right now, the credits can only be applied to the purchase of a new EV and are limited to 200,000