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US Congress Reaches Compromise on Settlement Bill for Reducing Inflation Act of 2022

GOAL: Reducing national greenhouse gas emissions by 40% by 2030.

IMPORTANT: The bill would establish federal tax credits for businesses purchasing electric and plug-in hybrid trucks, buses, vans, shuttles, and other heavy-duty vehicles,

1) Multiple significant investments in decarburization and air quality.

2) The bill also includes amending and extending consumer tax credits for light-duty electric vehicles

3) Tesla and GM are now included again, removing their 200,000-vehicle cap.

4) In order to receive full credit, the vehicle needs to be assembled in North America, and most of the battery components come from the United States, and finally contain a certain percentage of minerals from countries that have free trade agreements with the United States.

5) New rules for used electric vehicles: Buy a used electric vehicle now to get a $4,000 federal tax credit.

6) Zero-emission vans, SUVs, and trucks with a suggested retail price of up to $80,000 are eligible for the credit, while electric sedans with a suggested retail price of up to $55,000 are eligible. The full EV tax credit is also now limited to individuals reporting adjusted gross income of $150,000 or less, or $300,000 for joint filers.



Necessity to promote the electrical transformation of commercial vehicles

Cleaning up heavy vehicles is one of the most important tasks in reducing the transport sector's warming greenhouse gases and toxic air pollution.

This is especially important for communities living near or downwind of ports, railroads and freight corridors, which historically bear the brunt of exposure to these harmful pollutants and their associated negative health consequences.

Despite only making up about 10 percent of vehicles on the road, heavy vehicles are responsible for 28 percent of greenhouse gas emissions, 45 percent of nitrogen oxides, and 57 percent of vehicle fine-particle pollution in the U.S.

 

As with light-duty cars and trucks, purchase incentives can significantly accelerate the development of the zero-emission heavy-duty truck and bus market. Although there are currently more than 100 zero-emission heavy-duty models available in the U.S. market, the share of annual sales is low.

Federal purchase incentives are likely to drive market growth so that electric trucks and buses reach 80% market share by 2035.

 

The current version of the bill includes a tax credit of up to $7,500 for small commercial vehicles, such as pickup trucks and delivery vans, and a tax credit of up to $40,000 for larger vehicles ranging from tractors to garbage trucks. BEVs will receive a larger line of credit than hybrid plug-ins, with incentives running until 2032. The bill also includes several other provisions related to the cleanup of heavy trucks and buses, including $1 billion for zero-emission clean heavy-duty vehicles such as school buses and related infrastructure (40 percent of which is specifically for federal non-compliance areas) and 30 $100 million in additional funding for electrified charging infrastructure for the new Postal Service delivery fleet. The cost of batteries is falling as soon as possible, but the cost of buying electric vehicles is still much more expensive than buying traditional fuel vehicles. This measure of the US government can narrow the price gap between the two to a certain extent. But federal tax credits alone are unlikely to fully bridge the gap between the upfront cost of electric trucks and gasoline or diesel vehicles. However, given that electric trucks can be 14% to 52% cheaper to operate and about 40% cheaper to maintain than combustion-powered trucks, fleets will realize cost savings faster because of this incentive. But implementation of current policies still requires federal and state regulatory action: policies such as California’s Advanced Clean Truck Rule requiring manufacturers to produce more and more electric trucks, and tight federal limits on emissions of ozone-forming nitrogen oxides are key, and these policies will be complemented in the Reducing Inflation Act 2022.


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