Article
Plugged-in: Manufacturers move to meet domestic EV demand
June 14, 2023 · Authored by Chris Urchell, John Golliday
The move towards electric vehicles (EV) has become a full-scale lithium, cobalt and nickel rush. With consumer interest firmly established, governments and manufacturers are pivoting to provide the infrastructure needed to meet the increase in demand.
The Biden Administration recently announced bold goals for an EV future, stating by 2030, 50% of all new vehicles purchased in the U.S. will be electric. In support of Biden’s Investing in America agenda, Congress passed the Inflation Reduction Act of 2022 (IRA), and the White House recently announced the EV Acceleration Challenge to build public-private partnerships that will provide the tools and resources communities need to meet the 2030 goal.
Enticing EV tax credits and incentives for manufacturers
Enacted last year, the IRA ear marks $370 billion for clean energy solutions including carve outs for the manufacturing of EVs, charging infrastructure and battery manufacturing. A portion of the act is designed to incentivize the purchase of EVs and the development of the infrastructure needed to support the growing fleet by providing credits for building residential, commercial and municipal EV charging stations. EV manufacturers can tap into the IRA energy provisions through Section 45X and Section 48C which sets aside $10 billion in investment tax credits. For more information on manufacturing credits, watch Baker Tilly’s webinar: Inflation Reduction Act: what manufacturers need to know now.
Incentives in the IRA build on incentives included in the 2021 Infrastructure Investment and Jobs Act (IIJA). Sections within the IIJA set out to encourage states to begin work on charging station networks and shift public transit to green energy. Governments can tap grants for a variety of projects funded by the act, with the ultimate goal of building a nationwide network of 500,000 public charging stations.
Tucked into the IRA, the Advanced Energy Project Credits (AEPCs) are designed to promote the expansion of U.S. manufacturing capacity, create clean energy jobs in production and recycling, reduce greenhouse gas emissions and procure domestic supply chains for needed materials. The credits can be applied to the costs of rehabbing factories with equipment that lowers greenhouse gas emissions by at least 20%. AEPCs also apply to costs associated with rehabbing, expanding or creating facilities that process, refine or recycle critical EV related material like those needed to manufacture batteries.
