New tax credits for electric vehicles in America have alarmed dealers, who fear an uncertain market scenario. Instead, China has decided to extend the tax exemption for the purchase of new energy vehicles until the end of 2023
Emiliano Ragoni
– Milano
The diametrically opposed choices of China and the US could turn the tables on the electric car market. Biden’s moves have in fact displeased everyone and, in particular, the American dealers. The latter, in fact, say they are not convinced of the effectiveness of the new tax credit for the purchase of electric vehicles. According to the dealers themselves, the transition to the new tax credit for electric vehicles is “incredibly confusing”.
made in usa
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President Joe Biden signed the Inflation Reduction Act on Tuesday, which calls for a move from the old $ 7,500 tax credit for electric vehicles to a new, more complicated system designed to incentivize the domestic production of electric vehicles. , reduce dependence on foreign supply chains and prevent wealthier buyers from benefiting from incentives. When the new law goes into effect, electric vehicles will need to be assembled in North America to get the credit. From January 1, the new restrictions on list price, buyer income, battery components and sourcing of critical minerals will come into effect. Car manufacturers are considering reshaping their electric vehicle supply chains to meet the new procurement rules all the time. Dealers, on the other hand, are unsure of the effect of the new credit on showrooms, worried about how complex eligibility requirements will affect customer relationships.
too much consusion
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“It just creates a lot of confusion that we need to try to explain to customers,” said Cody Lusk, chief executive officer of the American International Automobile Dealers Association. Lusk, whose group represents more than 9,000 international brand dealerships in the United States, said few vehicles would qualify for credit until the end of the year, and that dealerships will be tasked with explaining the nuances of eligibility to customers. “This creates an uncertain scenario within the car showroom, for dealers and customers, because the latter think that the credit is provided by the federal government – he said to Automotive News -. In fact, it won’t be for some time, if at all. “The Biden administration said around 20 models meet the North American final assembly requirement and therefore can still qualify for vehicle tax credits. electric vehicles up to $ 7,500 until the end of the year. However, according to the Alliance for Automotive Innovation, a trading group that represents the majority of major US automakers, none of these 20 vehicles will be eligible for the full credit when, next year, the new procurement rules will come into effect. The National Automobile Dealers Association has declared its support for many of the new provisions contained in the Inflation Reduction Act, including the extension of the tax credit to allow for access to fuel cell vehicles and the removal of the limit of 200,000 vehicles per manufacturer Under the new law, consumers po s are requesting the tax credit for electric vehicles on the tax return of the year of purchase or, starting from 2024, the credit can be transferred to the dealer. The automakers will provide chassis numbers and suitability, “allowing dealers to explain that the suitability of the vehicle has been determined by Congress,” Nada said in a statement. “As with any renewed program, there will be a short-term transition period.”
how will the market react?
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Michelle Primm, managing partner of Cascade Auto Group, Mazda, Audi and Subaru dealership in Cuyahoga Falls, Ohio, said the changes are challenging and do not bring the United States closer to meeting the administration’s climate goals, but rather, ” they make us take a step back “. Tim Jackson, chief executive of the Colorado Automobile Dealers Association, said the new credit could “wreak much havoc in the market” for automakers and dealers, as well as for consumers who were considering electric vehicles and who expected to receive the $ 7,500 incentive under the old program. So, the question that many American dealers are asking themselves is this: If many vehicles fail to qualify for the incentives, will consumers still be willing to buy an electric car, even more expensive than a thermal one?
what china does
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China has instead decided to extend the exemption from the purchase tax of new energy vehicles (i.e. electric, plug-in hybrids and hydrogen) until the end of 2023, creating tax cuts for a total value of 100 billion yuan, approximately. 14.6 billion euros at the current exchange rate. The objective of this provision is to maintain leadership in a key growing market, in a context where the general economy has suffered a slowdown due to the restrictions due to the new wave of Covid-19.
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