Inflation Reduction Act: Support for EV/PHEV/FCEV Purchases

List of models eligible for IRA tax credits; battery suppliers and plant locations



  Following the implementation of the Inflation Reduction Act in August 2022, multiple changes relating to electric/electrified vehicles became effective as of April 18, 2023. This specifically refers to vehicles purchased on or after this date (regardless of actual date of manufacture).

  The overall aim of these changes is to help spur development of battery and EV-related businesses, as vehicles must meet increasingly stringent rules regarding content and location of vehicle assembly. This could also lead to the creation of new jobs, reduce unemployment, and ultimately, help curb inflation.


  Reviewing the major provisions of the IRA, eligible vehicles can be eligible for up to USD 7,500 if the following conditions are met:

  1. To obtain USD 3,750, at least 50% of the vehicle’s battery component must be produced or assembled in North America.
  2. To obtain the second USD 3,750, at least 40% of the critical battery minerals must be extracted or processed in the US or with a free-trade partner country.
  3. Also, income limits and MSRPs are also factors used in determining vehicle eligibility.
  4. In other words, the USD 7,500 is not automatically guaranteed simply because a vehicle is electric/electrified.


  The main reason for continued revisions is to help develop US-based EV parts/vehicle manufacturing, and/or to source parts or vehicles from other countries with whom the US shares free-trade agreements. The main goal is to ultimately reduce reliance on China (especially for lithium) and other countries and bring as much of the process into the US as possible.


Related reports:
Mexico: Investment plans for near-shoring and EV shift (Apr. 2023)
U.S. Market: Policies to Expand Semiconductor Production and Popularize EVs (Oct. 2022)
NAIAS 2022 (1) : U.S. OEMs increase emphasis on battery electric vehicles (Oct. 2022)
U.S. Fuel Economy Regulations Tightened: MY 2026 CO2 171 g/mile, CAFE 52.0 mpg (Sep. 2021)
U.S. Market: Biden Administration Plans to Promote EVs and Strengthen Semiconductors (Jul. 2021)


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