When Nissan's long-awaited second all-electric model, the Ariya, rolls into stores by early next month, it will have to do so without the federal support that has powered EV adoption in the U.S. for more than a decade.
The Inflation Reduction Act alters the eligibility rules for a long-standing $7,500 EV tax credit. Designed to incentivize domestic EV production and reduce reliance on foreign supply chains, automakers must now assemble EVs and plug-in hybrids in North America to qualify for the credit.
That means the Japan-made Ariya won't be eligible for the federal incentive, potentially putting its starting price of $44,485 at a competitive disadvantage.
Aditya Jairaj, Nissan's director of U.S. EV marketing and sales strategy, said the loss of the credit is unlikely to have a near-term effect on sales as few vehicles on the market now qualify under the new rules.
"But there are some changes or adjustments we need to look at in the longer term," Jairaj said. "We're looking at how those could be expedited … so our relative competitiveness remains strong."
One of those adjustments could involve shifting some Ariya production to the U.S. Some automakers, including Nissan's rival Hyundai Motor Group, are considering accelerating plans to move EV assembly and battery production stateside to qualify for the credit.
Nissan, like its competitors, has announced plans to pivot more of its existing U.S. factory capacity to next-generation EVs. The Japanese automaker is making an $18 billion bet on electrification, vowing to deliver 15 battery-electric models globally by 2030. That figure involves a $500 million investment at Nissan's underutilized truck plant in Canton, Miss., to build two EV models starting in 2025.
Auto analyst Sam Fiorani said North American production of EVs will become necessary for automakers to stay competitive and qualify for the tax credit.
"Moving production of any imported EV stateside increases the profitability for the manufacturer by thousands of dollars," said Fiorani, vice president at AutoForecast Solutions.
But Jairaj demurred on the possibility of a Canton-built Ariya.
"Everything is on the table," he said. "We've got to evaluate because there are different [eligibility] requirements. It's not just for production."