Higher cost of EVs compared to internal-combustion-engine models is a big factor in slower U.S. adoption compared to other regions.  -  IMAGE: Pexels/Kindel Media

Higher cost of EVs compared to internal-combustion-engine models is a big factor in slower U.S. adoption compared to other regions.

IMAGE: Pexels/Kindel Media

Guidance released by the Biden administration clarifies rules governing electric-vehicle tax credits.

Limits around the credits aimed at curtailing China’s EV supplies dominance reduce the number of EVs that qualify.

The fullest possible credit of $7,500 per new EV purchase would go only to vehicles without battery material originating in China or other countries on the U.S. hostile list, or “foreign entities of concern,” which also includes the likes of North Korea and Russia.

Though the administration is trying to increase EV adoption in the U.S., where many consumers have continued to resist switching from gas-powered vehicles, the guidance would likely slow that very shift by limiting the number of models that qualify for tax breaks.

EV adoption, at 8% in the U.S. in the third quarter, still lags the pace in Europe, where EVs now make up 14% of market share. Higher cost of EVs compared to internal-combustion-engine models is a big factor.

Carmakers have recently downshifted their EV production plans due to sales proving slower than they’d expected.

DIG DEEPER: EV Interest Flat

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