Spotlight Weekly – Inflation Reduction Act
The Inflation Reduction Act (IRA) had a massive impact on the electric vehicle (EV) market
Its tax break is a tailwind for adoption of electric vehicles. And it isn’t alone. These kinds of incentives are going on all over the world. And even though it has some flaws, it still adds to the global trend of EV adoption.
In theory, the IRA offers a $7,500 tax credit to folks who buy a new EV. But only a handful qualify. The vehicles must be made from U.S. parts in the U.S. And they can’t cost more than $55,000 ($80,000 for SUVs and trucks). That’s a problem for some vehicles, like the Ford F-150 Lightning. The electric version of America’s best-selling truck commands prices up around $100,000.
According to Consumer Reports, there are 12 EV models that qualify whole subsidy. The unwelcome news is that only three of these vehicles have a price under $80,000. That means budget conscious car buyers will not get the entire tax credit. That’s a hit to the Nissan, Hyundai, and Kia EV models. However, it’s great news for General Motors (GM).
GM says EV sales should top $50 billion in 2025. They plan to build 400,000 EVs in North America by mid-2024. By 2025, the company will be able to build 1 million new cars per year. That’s in part thanks to the Inflation Reduction Act and other legislation like it around the world. Demand for EVs is growing steadily.
According to the EY Mobility Consumer Index, 52% of global car buyers are looking for EVs. This is a global survey of 13,000 consumers across 18 countries. They see a trend towards individual car ownership. It’s a “mobility shift” that will help drive global demand for EVs.
EY Mobility Lens Forecaster predicts that EV sales will dominate all vehicle sales by 2033.
So, here’s the takeaway – demand for batteries (and battery metals) is coming. These vehicles can’t get made without the stuff. That means we want to own a wide range of companies that will benefit from the surge in EV demand.