An automotive group representing car makers including Ford, General Motors and Toyota said most electric vehicles will be ineligible for a tax credit proposed under a new Senate bill.
In a statement released Sunday, John Bozzella, president and CEO of the Alliance for Automotive Innovation, said a tax credit available in the Inflation Reduction Act approved by the Senate “will immediately reduce” the number of vehicles eligible.
Bozzella said 70% of the electric vehicles available to buy in the U.S. would become immediately ineligible once the bill passes, and none of the vehicles would qualify for the full credit.
“That’s a missed opportunity at a crucial time and a change that will surprise and disappoint customers in the market for a new vehicle,” said Bozzella in a statement.
The group says the reason many vehicles would automatically lose eligibility are requirements in the Clean Vehicle Credit which include sourcing critical materials for the battery from North America or a U.S. free trade partner.
The value of the credit will also depend on which components of the vehicle’s battery were built in North America.
Any electric and plug-in hybrid vehicles purchased new in or after 2010 are eligible for a federal tax credit of as much as $7,500, according to fueleconomy.gov, which also features a list of eligible vehicles.
In a separate blog post, Bozzella called the requirements in the credit unattainable and punitive to consumers.
“A more gradual phase in of the battery component, critical mineral and final assembly requirements – that better reflect current geopolitical, sourcing and mineral extraction realities – will preserve the credit for millions of Americans and keep the country focused on building domestic supply chains able to support our electrified transportation future,” he wrote.
Automakers are continuing to pivot toward electric vehicles as rising gas prices have many Americans considering whether to shift away from gas-powered cars. A survey released in May by J.D. Power found more car buyers were considering going electric for their next vehicle.
Follow Brett Molina on Twitter: @brettmolina23.