Federal EV tax credit termination to affect costs
TL/DR –
The federal tax credit for electric vehicles (EVs) in the U.S., which can provide up to $7,500 in tax credits for new EVs, is set to expire at the end of September 2022. The anticipated expiration could notably increase out-of-pocket costs for consumers and slow down EV sales and adoption rates, particularly impacting low to medium income ranges. The end of this federal incentive also signifies a potential slowdown in the adoption of electric vehicles and a corresponding impact on related industries.
Federal EV Tax Credit Expiration Could Increase Costs for Buyers
The federal tax credit for electric vehicles (EVs), which was previously expected to last through 2032, is due to expire at the end of September. This could potentially increase costs for those planning to go electric. The president signed this into law as part of a broader tax and spending bill.
Benefits of the EV Tax Incentive
The tax incentive has allowed taxpayers to qualify for up to $7,500 in tax credits for new EVs and up to $4,000 for used ones, as per the U.S. Department of Energy. The Inflation Reduction Act of 2022 implemented this credit, administered by the IRS.
Impact on Green Energy Jobs
Elaine Borseth, President of the San Diego Electric Vehicle Association, expressed disappointment over the credit’s end because it might lead to a reduction in green energy and electric vehicle jobs.
Implications for EV Sales and Adoption Rates
The termination of these credits could impact EV sales and adoption rates. Alan Gin, an economics professor at the University of San Diego, warned that this could slow down sales as EVs are generally more expensive than gas-powered cars.
Effect on Different Income Groups
Gin added that the tax credit’s end would affect low to medium-income groups more as they have less income, and these incentives allowed them to afford electric vehicles.
Advice for Prospective EV Buyers
For those thinking about buying an EV, Borseth suggests acting fast ahead of the credit’s expiration in September.
Potential Shift in the EV Market
This federal incentive’s end could mark a significant shift in the EV market, potentially slowing down electric vehicle adoption and affecting related industries.
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