General Motors CEO Mary Barra recently spoke with analysts. She stated that the company’s EV models will qualify for a full tax credit in two to three years. The Inflation Reduction Act (IRA) was passed in August. According to the act, the EV tax credit can reach up to $7,500 for new EV purchases.
To avail of the tax credit, there are certain conditions. It should adhere to specific battery mineral sourcing and components assembly requirements to qualify. The bill’s provisions are designed to bring manufacturing to the US, where a significant portion of the minerals and EV battery components must be extracted, processed, and manufactured domestically.
The two conditions to obtain the EV tax credit include, “Critical minerals ($3,750) – Starting next year, at least 40% of the value of critical minerals used in the EV’s battery will need to be manufactured or assembled in the US, with its free trade partners, or recycled here in North America. Each year after that, the requirement goes up by 10%. For example, in 2024, 50% will be required, 60% will be needed in 2025, 70% in 2026, and so on.”
The other condition is, “Battery components ($3,750) – Also, beginning next year, at least half of the value of the EVs battery components will need to be manufactured or assembled in North America. Likewise, the requirement will increase by 10% each year.”
Automakers like General Motors are making swift progress to ensure their electric vehicles qualify for the tax credit as new climate initiatives expect to accelerate demand for EVs further. GM released Q3 earnings Tuesday, reporting a record $41.9 billion in revenue as the company continues building out its EV portfolio, including battery components. With GM planning to become an all-electric brand, qualifying for the tax credit will likely be critical to the automaker’s success in its home market.
Barra continues, saying, “We’re well positioned there,” adding its commercial fleet, Brightdrop, will also be important in terms of federal incentives. Furthermore, GM believes that with its domestic battery cell and module production in the US, there’s a “significant opportunity” to leverage the EV tax credit of up to $45 per kilowatt hour.
GM is building four battery cell plants through its Ultium partnership with LG Energy. The first one, in Ohio, began production earlier this year as GM plans to roll one out each year. The automaker plans to sell 1 million EVs in North America and China by 2025, and the tax credits will play a vital role in getting there.