The Inflation Reduction Act Presents A Unique Opportunity For Real Progress
When President Biden signed the Inflation Reduction Act on August 16, it marked the most significant step toward addressing climate change in the nation’s history. The legislation includes funding for programs to help cut the nation’s greenhouse gas emissions by 40 percent below 2005 levels by 2030.
This legislation, which includes roughly $38 billion for transportation electrification, coupled with the recently passed Infrastructure Investment and Jobs Act, which earmarked $7.5 billion for installing nationwide electric charging infrastructure, marks a watershed moment in the realm of clean transportation and addresses the negative effects of greenhouse gas emissions leading to climate change. While the work is just beginning. It is as though the nation is finally accepting its role to lead the world in combating its warming.
Our friends at Atlas EVHub have done a great job of detailing how the legislation affects EV buyers and manufacturers here.
A few high-level takeaways include maintaining the $7,500 tax credit for the purchase of an EV, while removing the 200,000 vehicle sales cap on manufacturers, thus allowing Tesla and GM EV buyers eligible for the credit, provided the costs are under $55,000 for a car or $88,000 for an SUV, van or pickup. There is a used EV tax credit of $4000 or 30 percent of the vehicle’s sales price (whichever is lower). There is $1 billion to clean heavy duty vehicles. $2 billion for the domestic production of clean vehicles. And $50 million to reduce air pollution and GhG emissions at schools in low-income and disadvantaged communities, among many other elements which will contribute to lowering emissions nationwide.
Internationally, subsidies promoting the adoption of electric vehicles, from purchasing rebates to charging access have boosted adoption rates in European and Asian countries significantly. U.S. market share of EV sales is one-third that of China’s. It is important that the United States stays competitive in this field for both environmental and economic reasons and this bill does that.
Forth has been working on these issues for over a decade now. More recently, we realigned our strategic mission to focus on key focus areas based around increasing access to electric modes of transportation and charging. This legislation aligns well with our focus.
Forth has long advocated for the importance of rebates to help spur the widespread adoption of EVs. We spearheaded Oregon’s EV Rebate, and recently helped increase it for low- to medium-income earners, making it one of the nation’s most generous. We worked especially hard to ensure that used EVs qualified for rebates in Oregon's EV rebates and are pleased that they also qualify for a Federal tax credit as well under the IRA. For example, an income-qualifying used EV purchaser in Oregon could qualify for a $5,000 state rebate as well as a $4,000 Federal tax credit. An income-qualifying purchaser of a new EV could qualify for as much as $7,500 in state rebates in Oregon as well as a $7,500 Federal tax credit.
But because EVs are still a nascent technology, and because of recent disruptions to the supply chain, there is an imbalance of supply and demand. Currently, almost every EV coming out of a factory is spoken for before it can make it to a showroom. Used EVs are even scarcer, thus prices remain high as inventory remains low. This was not the case just a few years ago when a used Nissan Leaf could be found for under $15,000. With rebates such as those in Oregon, the price was as low as $10,000 before allocating the $7500 federal tax credit. It will take some time until we’re in a similar environment again. Nevertheless, there remains significant work to be done to increase equitable access to this technology to underserved and underrepresented communities.
Until the used EV market is further developed for low- and medium-income earners, EV carsharing programs such as the ones Forth is developing provide access to electric vehicles without the costs of ownership. Carsharing models will increase the number of used EVs on the market when these fleets need to be updated. The same holds true in the rental market. If car rental agencies and corporate and government fleets purchase EVs, when they replace them, it provides significant inventory to the used market.
The work to increase access to charging is as important as increasing access to electric vehicles. In addition to vehicles, we’ll also need plenty of functioning chargers. The funding to create nationwide charging in the IIJA is the first step to addressing this. The second step is to ensure that states, especially those without much experience with EVs and access, are put in a position to succeed with the funding. We are key consultants on the national and state level on the equitable installation of charging – our national policy recommendations informed the infrastructure package and our analysis and recommendations influenced Oregon’s charging infrastructure plan. Further, we are helping vulnerable communities access $2.5 billion for charging infrastructure. We’re also developing a nationwide workplace charging initiative, developing key research on how to increase access to charging at multi-unit dwellings. Importantly, we are also working in micromobility and other emerging modes such as electric school buses and agriculture, which we see as essential elements of a holistic transformation to electrifying everything that moves.
In closing, we, like many of our colleagues and peers applaud the work of the President, House and Senate in passing this series of historic legislation. It comes as sweet relief after years of struggle, and we are now at least better equipped for the task at hand. But organizations such as Forth, state, local governments and communities must all roll up our sleeves and work together to ensure that we capitalize on this moment and get the work done in an equitable and efficient manner. We hope you'll join us.