A recent analysis by Gil Tal, the director of the Electric Vehicle Research Center at the University of California, Davis, suggests that the incentives provided by the Infrastructure Investment and Jobs Act (IRA) for electric vehicles (EVs) are likely to have a greater impact on stimulating demand compared to previous federal policies. The IRA offers tax credits that can be taken as a price cut at the point of sale, making them more appealing to customers.
According to projections from RMI, a nonprofit research group focusing on clean energy, the EV provisions within the IRA, including subsidies for new charging stations, could lead to an additional 37 million electric cars and trucks being sold by 2032. This surge in EV sales could potentially reduce transportation emissions by 2.4 billion tons by 2040.
The IRA provides two tax credits for EV buyers, with one offering a $3,750 credit for purchasing vehicles with batteries containing critical minerals mined or processed in the US or countries with free-trade agreements. Another credit is available for vehicles with battery components manufactured or assembled in North America.
While the impact of the IRA on tax revenue will be under scrutiny as the program ramps up, experts like Tom Moerenhout from Columbia University’s Center on Global Energy Policy argue that these tax credits should not be viewed simply as forgone federal revenue. Despite concerns about potential failures and questionable practices, the IRA’s incentives are expected to significantly boost the adoption of EVs and contribute to a greener transportation sector in the future.
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