TL/DR –
Electric vehicle (EV) sales are rapidly increasing in the US, with the recently passed Inflation Reduction Act expected to further boost sales through consumer subsidies. In August, 70,871 electric vehicles were sold in the US, a 43% increase from August 2021, and electric vehicles accounted for 6.28% of total light-duty vehicle sales. However, the success of the Inflation Reduction Act in reducing the greenhouse gas emissions causing climate change could be undermined by restrictions on tax credits for EVs, such as those on the place of manufacture and processing of critical minerals.
Surge in US Electric Vehicle Sales Linked to Climate Change Initiatives
As the US sees a rapid rise in electric vehicle sales, the recently enacted Inflation Reduction Act could potentially drive these numbers higher. This Act provides consumers with subsidies, thereby making electric vehicles more affordable.
US President Biden highlighted on Twitter that electric vehicle sales have tripled since his tenure began, emphasizing that each electric vehicle sale represents a victory against climate change.
As per US Department of Energy statistics, August saw the sale of 70,871 electric vehicles, including fully electric and plug-in hybrids, indicating a 43% increase from August 2021. Electric vehicles made up 6.28% of total light-duty vehicle sales last month.
Despite this growth being attributed more to high fuel prices than specific policies, Biden’s administration has been proactive in promoting electric vehicles. As stated by the White House, companies have invested approximately $85 billion in electric vehicle manufacturing, batteries, and EV chargers in the US since Biden took office.
The administration has also partnered with Congress to pass investments in electric vehicles and related infrastructure, facilitating the industry’s expansion. This includes the Infrastructure Investment and Jobs Act of 2021, which allocated $7.5 billion for a network of 500,000 EV chargers, $7 billion for securing critical battery minerals for domestic manufacturers, and $10 billion in subsidies for jurisdictions purchasing electric public and school buses.
The Inflation Reduction Act (IRA) extends the light-duty electric vehicle tax credit of up to $7,500 until 2032 and aims to substantially increase EV adoption. Garrett Fitzgerald, the senior director of electrification at the Smart Electric Power Alliance, believes that the IRA will boost EV deployment due to improved affordability and stimulation of the domestic industry to meet demand.
Despite certain restrictions in the IRA, such as credits limited to cars manufactured in North America, experts believe it holds transformative potential to reduce greenhouse gas emissions that contribute to climate change. However, the speed of expansion in US capacity for mineral mining, processing, and EV manufacturing could impact this potential.
While some projections for future EV sales are more conservative due to these limitations, others like BloombergNEF project that by 2030, 52% of new car sales in the US could be electric. The IRA includes other restrictions to prevent subsidizing luxury electric cars for the wealthy, such as price limits on eligible vehicles and income thresholds for consumers.
Despite these challenges, the increasing availability of electric vehicle models and the removal of previous tax credit restrictions are expected to boost sales. Furthermore, the IRA also provides subsidies for heavy-duty trucks and the installation of charging stations, potentially accelerating the transition to electric transport.
Learn more about the impact of global warming and climate change.
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