ORIGINAL REPORTING: The IRA And the EV Revolution

Biden ‘EV revolution’ delayed as utilities, carmakers await critical IRS guidance on Inflation Reduction Act; The Inflation Reduction Act’s EV ecosystem rules need clarity for customers, charger builders and global supply chain providers, analysts said.

Herman K. Trabish, March 17, 2023 (Utility Dive)

Editor’s note: Some EV makers have failed to qualify but overall this is accelerating EV sales and charger deployments at a record pace.

Labor, equity and domestic content rules in the 2022 Inflation Reduction Act must not make it too complicated for electric vehicle buyers or force cumbersome sourcing changes on carmakers, stakeholders said.

With the IRA’s expanded tax credit and funding, it can move EVs “into the fast lane” by accelerating emergence of a U.S. supply chain and charging infrastructure network, a January Energy Innovation report found.

The IRA, along with the Infrastructure Investment and Jobs Act, provides “nearly 30 times” the total EV funding in all previous federal programs, Atlas Public Policy found in September 2022.

But current rules include complexities on tax credit eligibility that could “discourage consumers and EV industry investments,” said Atlas Public Policy Founder Nick Nigro. And “eligibility will be more complicated when it includes requirements for battery component and critical battery material sourcing,” he added.

Clarity is needed, according to the more than 880 stakeholder filings with the Treasury Department’s Internal Revenue Service requesting guidance on how to implement aspects of the IRA, including comments from Ford, Dow and Samsung, .

IRS guidance on the IRA can create “a new future for U.S. transportation” if it “balances the needs of drivers, the EV industries, and the intent of the law,” said Electrification Coalition Vice President of Policy Katherine Stainken. “It is likely to be complicated but months of delay will mean little against decades of transformation,” she said.

Treasury must meet the law’s intent to renew the U.S. auto industry, policy analysts said. That will require rules for carmakers to identify and validate the complexities of battery component and critical mineral sourcing in ways that are simple for car buyers to understand, which is a challenging conundrum, stakeholders agreed.

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