So let’s talk about the IRA tax credit system,
As stated in pluginamerica, IRA (The Inflation Reduction Act, signed into law August 16, 2022, is an investment significant in clean energy and transportation technologies. It includes an array of supportive electric vehicle incentives.
The new IRA EV tax credit, $7,500 is known as the clean vehicle credit, split into two halves of $3,750. Both vehicles and consumers need to meet certain requirements:-
- A vehicle is eligible for one-half of the total credit ($3,750) if the vehicle has battery components that are manufactured or assembled in North America.
- To be eligible for the other $3,750, a vehicle must have critical minerals that were extracted or processed in the U.S. or countries with which the U.S. has a free trade agreement, or use critical minerals that were recycled in North America.
- The final assembly must take place in North America for a vehicle to be eligible.
- Only cars under $55,000 or SUVs, vans, and pickup trucks under $80,000 are eligible for the credit.
- On the consumer side, the income cap to be eligible for the credit is $150,000 for single filers, $225,000 for the head of household, and $300,000 for joint filers.
- There will be an option to apply for the new credit at the point of sale starting in 2024.
- The new credit requirements for battery components and critical minerals will take effect on January 1, 2023.
Now let’s talk about what Ford CEO said to be qualified for the new IRA tax credit system,
Jim Farley, Ford CEO, “team is making great progress in securing raw materials, importantly the processing of those raw materials and the battery capacity that we need.”
Regarding the IRA proving beneficial to Ford itself on the battery production front, Farley said:
“From ‘23 to ‘26, we estimate a combined available tax credit for Ford and our battery partners could total more than $7 billion with a large step-up in annual credits in ’27 as our [joint venture] battery plants ramp up to full production”.
A second point by CEO Farley,
“I haven’t read anyone in the media covering this, but it’s super important for Ford. And that’s the commercial EV credit. You know that Ford is the number one commercial vehicle brand in the US, and our commercial customers can now claim next year $7,500 per EV vehicle they buy with no restrictions on battery sourcing or manufacturing. Our preliminary estimate is that between 55% and 65% of all of our commercial vehicle customers will qualify.”
Third point,
“Ford EVs and our PHEVs remain eligible for the $7,500 tax credit until guidance is issued at the end of this year. Next year, we believe we’ll meet the $3,750 critical minerals credit requirement on certain Mustang Mach-E and F-150 Lightning models. In ’24, the rules will further restrict this critical materials credit. So, we believe it’s a fairly level playing field right now for all the OEMs as our supply chain of critical minerals extracted or processed in the US and FTA develops.”
However, CEO Farley mentioned “certain models”. Now how certain models will be shaped into the new IRA tax credit system and how some models will fall into the bracket or not or how they will manage to do it? Need to be seen.
Source:- electrek