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Fixing the Federal EV Tax Credit Flaws: Redesigning the Vehicle Credit Formula

EV Adoption

The Qualified Plug-In Electric Drive Motor Vehicles (IRC 30D) tax credit – commonly referred to as the “Federal EV tax credit” has a number of flaws, but one of the biggest is the poorly-designed formula that determines the amount of the tax credit available for each BEV and PHEV sold in the US.

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National Academies issues interim report on overcoming barriers to PEV deployment

Green Car Congress

Some research has shown that purchase rebates can be more effective than income-tax credits, the committee noted. Charging at such residences would meet the needs of all foreseeable PHEVs and of most BEVs that have ranges of up to 100 miles (161 km). A final, comprehensive report will be published in late summer 2014.

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Proposed Changes to Federal EV Tax Credit – Part 4: Chinese-Assembled Vehicles Will Not Be Eligible for Tax Credit

EV Adoption

One of the proposed changes to the federal EV tax credit that has flown a bit under the radar is also one of the most political and protectionist in nature. Effective January 1, 2022, electric vehicles with final assembly* (see definition at the end) in China would no longer qualify for IRC 30D (federal EV tax credit).

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Expert panel report finds achieving 1M plug-in vehicles in US by 2015 would require concentrated action to overcome barriers

Green Car Congress

BEVs vs. PHEVS. However, the obstacles to mass commercialization of BEVs are even greater than the obstacles for PHEVs. Given the high cost of battery production, a BEV that approaches affordability (with generous tax credits) has a driving range of about 70-100 miles on a full charge. Policy Instruments.

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Obama Administration launches series of actions to accelerate EV adoption; inc. $4.5B in loan guarantees, pursuing 350 kW fast charge

Green Car Congress

It will also list current tax credits and incentives applicable to EV charging. Alone, the federal government plans to purchase more than 500 plug-in hybrid electric vehicles (PHEV) or EVs in fiscal year 2017. Municipal fleet electrification.

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NRC report recommends ways to overcome barriers hindering purchases of PEVs; vehicle cost, battery tech and consumer knowledge among others

Green Car Congress

Is made more affordable than the long-range BEV by reducing the size of the high-energy battery. Range-extended PHEV. Minimal PHEV. Given the research on effectiveness of purchase incentives, the federal government should consider converting the tax credit to a point-of-sale rebate. Limited-range BEV.

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Zero EVs May Qualify For the Federal Tax Credit Under the Inflation Reduction Act Requirements

EV Adoption

Additionally, the IRA could actually receive enough votes to pass, but not without potentially several significant changes — including to some of the EV tax credit requirements. This means EVs like the Mustang Mach-E which is assembled in Mexico, and the Chrysler Pacifica Hybrid (PHEV) which is assembled in Canada, would qualify.