A number of automakers, as well as the South Korean government, are urging President Barack Obama to use a credit for commercial electric vehicles to increase consumer EV access. This could ease some concerns about the climate legislation that was approved by Congress.
Inflation Reduction Act of the United States (IRA), valued at $430 billion, ended consumer credit credits worth $7,500 for electric cars made outside North America. This angered South Korea, Japan, and other countries.
Automakers believe that a less-known IRA provision to “commercial clean cars” might be helpful in boosting EV manufacturing and addressing foreign concerns.
Rivian Automotive, Hyundai Motor, and Kia Corp among other groups want the administration allow consumer vehicle leasing to be eligible for the commercial electric vehicle tax credit which could lower monthly lease payments.
In comments released Tuesday, the South Korean government urged Treasury to “interpret commercial clean vehicles broadly”, which would include rental cars and leased vehicles as well as vehicles that are used in Uber or Lyft.
South Korea asked Treasury to not impose budget restrictions on credit for commercial vehicles through 2025.
Hyundai and Kia are asking Treasury to grant a tax credit of up to $4,000 to people who lease EVs, if they purchase vehicles after their leases end.
The IRA consumer EV credit imposes substantial battery mineral and component sourcing limitations, establishes income and price caps on qualifying vehicles, and seeks out to phaseout Chinese batteries minerals or components.
Commercial credit has different pricing and sourcing restrictions than the standard, but it does have an eligibility test for “incremental costs” that could prove difficult. Treasury should make it simpler for commercial light-duty vehicle manufacturers to qualify for $7500 tax credits.
Last week, President Joe Biden stated that “there are some tweaks we can make to make it fundamentally easier for European nations to participate.”
Some carmakers are against using consumer credit to finance auto sales.
Toyota Motor Corp, stated that “the absence of criteria for (commercial credit) eligibility could compromise the IRA’s efforts to increase domestic production of EV battery and preserve America’s energy independence.”
Tesla stated that commercial credits should only be available to commercial end-users and that the consumer credit for tax purposes “should be limited to individual end-users.”
General Motors Chief Executive Mary Barra stated to Reuters Monday at an event that foreign credit concerns are “more complex than one thing can solve them” and said it was important to “stick to the intent” of Congress’ bill.
