Joe Biden Ignores Elon Musk & Signs the Inflation Reduction Act into Law, 70% Fewer EVs Now Qualify for $7,500 Credit

Zack Love

President Biden and Elon Musk both have plans for the future of electric vehicles. The President would not entertain Elon Musk's idea and moves forward with changes to EV credits.

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President Joe Biden (public domain) and Elon MuskElon Musk image by Debbie Rowe - Own work (CC BY-SA 4.0); text added by Zack Love

President Biden Signs the Inflation Reduction Act Which Affects U.S. EV Credits

On Tuesday, 16 August 2022, President Biden signed the Inflation Reduction Act into law, which impacts the future of the electric vehicle (EV) market. It is now more difficult for Americans to receive EV credits under the Inflation Reduction Act. Matt McFarland of CNN Business reported: "Volkswagen, Nissan, Rivian, Vinfast, and Lucid helped buyers accelerate purchases so they didn't miss out on the final hours of the existing credit."

Here are the details of the original and new EV credits:

The original EV credit: Under the old EV credit rules, new electric vehicle customers received as little as $2,500 and as much as a $7,500 credit for qualifying electric vehicles. The qualifying provision is that they can no longer offer the credit when each automaker has sold 200,000 electric vehicles. However, the Internal Revenue Service (IRS) did provide a list of eligible vehicles to help consumers shop for electric vehicles for the original EV credit.

The original EV credit rules expired when President Biden signed the Inflation Reduction Act.

The new EV credit: Under the new rules that took effect with the Inflation Reduction Act, it becomes more difficult to get a $7,500 EV credit, with provisions that discourage Americans from buying electric vehicles that contain Chinese-origin parts and the EV must be assembled in the U.S. The new provision also indicates that the EV battery must be sourced or processed in a country that has an existing free trade deal with the U.S. (Source: CNN Business)

*The new EV credit restrictions resulted from an agreement between Senate Majority Leader Chuck Schumer and Senator Joe Manchin, that solidified the Inflation Reduction Act. (Source: CNN Business)

The downside of the new EV credit:

"70% of electric, hybrid and fuel cell vehicles available for purchase in the United States are now ineligible for any credit, including partial, and none will qualify for the full credit, according to the Alliance for Automotive Innovation, which represents automakers like Ford, GM, Hyundai, Toyota and Volkswagen." -Matt McFarland, CNN Business

An additional problem is the IRS does not yet provide a list of vehicles under the new EV credit rules, leaving consumers in the dark to know what kind of vehicles are now eligible for an EV credit.

https://img.particlenews.com/image.php?url=1ek5Fh_0hPAckid00
A Tesla charging at a Tesla charging stationImage by Blomst from Pixabay

The intent of the Inflation Reduction Act was to reduce America's dependence on Chinese parts and resources, yet the real impact of this bill is yet to be seen.

A Meeting Between President Biden and Elon Musk

The signing of the Inflation Reduction Act should not come as a surprise, considering the outcome of a prior meeting between the President and the "world's richest man," Elon Musk.In February 2021, Elon Musk met with the Joe Biden administration to discuss an issue that is very important for his company: carbon credits. He believes that carbon credits incentivize companies to move into renewable energy much faster.

This is what he said:

“My top recommendation honestly would be just to have a carbon tax…because we’re not paying for the CO2 capacity of the oceans and the atmosphere, we have what in economics is called an unpriced externality. The market is unable to respond to an unpriced externality. If we put a price on it, the market will react in a sensible way.” -Elon Musk
“If we just put a price on carbon emissions, the market will react in a sensible way. But because we don’t have a price on it, it is behaving badly.” -Elon Musk

Joe Biden Administration to Musk: Carbon Tax 'Too Politically Difficult'

Elon believes the best way to encourage companies to shift into renewable energy is to put a price on carbon (i.e. creating a carbon tax) which was discussed in his meeting with the Joe Biden Administration.

Elon Musk acknowledged that his company, SpaceX, would also be paying the carbon tax, under his proposition.

The Joe Biden Administration responded by saying it is “too politically difficult.”

Elon Musk shared his thoughts in an interview with Joe Rogan: “That’s at least half the reason you got elected, so why don’t you just fight for that?” (Source: The Joe Rogan Experience podcast, episode #1609).

Biden-Musk Relationship is Nonexistent over Politics

President Joe Biden did not invite Elon Musk to the White House event in August 2021 because Elon Musk does not support labor unions.

The companies that were invited to the August 2021 EV event at the White House were the three largest automobile companies and largest employers of the United Auto Workers (UAW) labor unions General Motors, Ford, and Chrysler (Source: Autoweek). Tesla was not present.

The tweet by CleanTechnica can be seen below.

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Cleantechnica & Elon Musk tweetTwitter: Cleantechnica @cleantechnica, Elon Musk @elonmusk (public domain)

Which EVs Do Not Qualify for the New Credit

The electric vehicle market will feel the impact of the new Inflation Reduction Act, as 70% fewer vehicles now qualify for EV credits due to the new stricter rules.

Consumer Report reported that these EVs will not qualify for the EV tax credit (due to assembly location):

  • Audi E-Tron
  • Fisker Ocean
  • Genesis GV60
  • Hyundai Ioniq 5
  • Hyundai Ioniq 6
  • Hyundai Kona Electric
  • Hyundai Nexo
  • Jaguar I-Pace
  • Kia EV6
  • Kia Niro Electric
  • Lexus RZ
  • Mazda MX-30
  • Mercedes-Benz EQB
  • Nissan Ariya
  • Polestar 2
  • Subaru Solterra
  • Toyota bZ4x
  • Toyota Mirai
  • Volkswagen ID.4 (only certain models)
  • Volvo C40

Consumer Report reported that these EVs will not qualify for the EV tax credit (due to vehicle price):

  • Audi E-Tron GT
  • BMW i4
  • BMW i7
  • BMW iX
  • Chevrolet Silverado EV (with certain options and trim levels)
  • Ford F-150 Lightning (with certain options and trim levels)
  • Genesis G80 Electric
  • GMC Hummer EV
  • Lucid Air
  • Mercedes-Benz EQE
  • Mercedes-Benz EQS
  • Porsche Taycan
  • Rivian R1T (with certain options and trim levels)
  • Tesla Cybertruck (with certain options and trim levels)
  • Tesla Model S
  • Tesla Model X

President Biden and Elon Musk do not see eye-to-eye on the future of electric vehicles. The former has an obligation to serve the American people, and the latter has obligations to Tesla shareholders.

Americans that wish to buy an EV and receive a credit may have to go without under the new rules thanks to the Inflation Reduction Act.

Time will tell if this new law is beneficial to automakers manufacturing electric vehicles.

Sources:

Barry, Keith. ''Which EVs Qualify for the New Electric Vehicle Tax Credit? It’s Complicated." Consumer Reports. 9 August 2022.

Ivanova, Irina. "These electric vehicles qualify for tax credits under the Inflation Reduction Act." CBS News. 19 August 2022.

McFarland, Matt. “EV credits are now harder to come by. These buyers snuck in deals under the wire.” CNN . 16 August 2022O’

Kane, Sean. “Elon Musk says the Biden Administration shot down his carbon tax pitch.” The Verge. 12 Feb. 2021.

Ramey, Jay. “Elon Musk Says Tesla Was Not Invited to White House EV Event.” Autoweek. 6 August 2021.

Times of India staff. “Elon Musk says Biden admin gave cold shoulder on carbon tax.” Times of India. 13 Feb. 2021.

The Joe Rogan Experience podcast, episode #1609

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Zack writes news stories that impact local communities. He has a bachelor's degree from UAH and an MBA from the University of North Alabama.

Huntsville, AL
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