A tax credit for electric vehicles wrapped into landmark US climate legislation comes with an asterisk: later this decade, there will be years when not a single car qualifies for the $7,500 subsidy.
The looming hiatus for the tax credit may make EVs less affordable — at least temporarily — as the Biden administration aims to wean Americans off internal combustion engines. It reflects an effort to advance lower-carbon transport while also nurturing domestic manufacturing of battery cars.
The law signed by president Joe Biden last week immediately requires that any EV sold in the US must be assembled in North America to qualify for the credit. The requirements grow stricter in 2024, when eligible EVs must have battery components not made or assembled “by a foreign entity of concern”, which includes China, the dominant battery producer.