Tesla, GM, Rivian, Ford and other electric vehicle (EV) makers can make savings worth tens of billions of dollars from Joe Biden’s Inflation Reduction Act, according to broker Wedbush.
The act aims to incentivise US production and sales of EV battery components and minerals through a new battery production tax credit worth up to US$45/kWh.
Manufacturers might abandon international battery facilities in favour of US sites due to the subsidy, Wedbush analysts said in a note, with Tesla’s pause on battery production in Germany suggesting that this shift has already begun.
To qualify, manufacturers need to ensure that 50% of battery components are assembled in the US and 40% of critical minerals are sourced there or from free trade partners by 2023, with these figures potentially rising yearly by 10%.
Consumers will also be eligible for tax credit from 2023, worth up to US$7,500 for new vehicles and US$4,000 for old.
“The green-tidal wave shift to electric is fully upon us,” the Wedbush analysts noted, highlighting Tesla, Rivian, GM, and Ford as the big potential winners.
Alongside the incentives, funding worth US$7.5b has also been granted to increase America’s EV charging network size by almost five-fold.
The Wedbush analysts concluded that 2023 was “a key year for the EV world,” with many cars expected to be launched amid “the biggest transformation to the auto industry since the 1950's.”
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