Many automakers and the South Korean government are urging the Biden administration to use a commercial electric vehicle tax credit to boost consumer EV access, a plan that could help ease concerns over a climate bill approved in Congress.
The $430 billion U.S. Inflation Reduction Act IRA passed in August ended $7,500 consumer tax credits for electric vehicles assembled outside North America, sparking anger from South Korea, the European Union, Japan and others.
Some automakers say that IRA provision for commercial clean vehicles could be used to boost EV manufacturers and address foreign concerns.
According to Rivian Automotive, Hyundai Motor, Kia Corp and others, the administration wants to let consumer vehicle leasing qualify for the commercial EV tax credit that could reduce monthly lease payments.
In comments made public Tuesday, the South Korean government urged Treasury to interpret ''commercial clean vehicles broadly to include rental cars, leased vehicles and vehicles purchased for use in Uber or Lyft rideshare fleets.
South Korea asked Treasury not to impose any budget restrictions on commercial vehicle tax credits through 2025.
If you buy vehicles after leases end, you can qualify for up to $4,000 tax credit for leasing EVs, and they want to be able to get up to a $4,000 tax credit.
The IRA consumer EV tax credit imposes significant battery minerals and component sourcing restrictions, sets income and price caps for qualifying vehicles and seeks to phase out Chinese battery minerals or components.
Commercial credit has an incremental cost eligibility test that might prove complex, even though it doesn't have the same sourcing or pricing restrictions. Some automakers want Treasury to make it easier to make sure commercial light-duty vehicles qualify for $7,500 tax credits.
President Joe Biden said last week that there are tweaks that we can make that make it easier for European countries to participate. Some automakers oppose using commercial credit for consumer sales.
Toyota Motor Corp said the lack of criteria to qualify for commercial credits could undermine the IRA's goals to expand domestic production of EV batteries and maintain America's energy independence. The consumer tax credit should only apply to commercial end users, and Tesla said commercial credits should only apply for commercial end users. General Motors Chief Executive Mary Barra told Reuters on the sidelines of an event Monday that addressing foreign concerns about the credit is more complicated than just one thing to solve it, and added that sticking to the intent of the bill drafted by Congress is important.