Think what you will about the details of the Inflation Reduction Act of 2022 that President Joe Biden was expected to sign over the weekend, but know this: No automaker — and very few portions of the U.S. auto industry — will be left unchanged by this complex piece of legislation and its new rules for electric vehicle subsidies.
As it happens, Automotive News is in the midst of our annual analysis of automakers' product plans, which are surely being reevaluated as these words are written and read.
Every vehicle is the product of a business case made well before its assembly, and EVs are no different than combustion-powered ones in that regard. But now the ground rules have been suddenly and fundamentally altered, and the lengthy development time required to bring a new vehicle to market will leave some manufacturers exposed.
Take, for example, an automaker that previously may have proceeded cautiously into electrification, scared off by its massive upfront capital requirements and previous lack of buyers, or any of the startups venturing into EV auto manufacturing. The 200,000 tax credits worth $7,500 each to their customers — credits that have been on the books for more than a decade — have suddenly disappeared.
Or consider how the legislation might impact future battery development and chemistry decisions. Does an automaker whose current battery chemistry relies on cobalt, about 70 percent of which comes from Democratic Republic of Congo, try to switch chemistries to something that might be less efficient but allows it to qualify for the new subsidy? Or does the automaker bite the bullet and forget the tax credit altogether, banking that it can provide enough range or fast charging to overcome the $7,500 disadvantage?
