Comments to Treasury on the IRA's Clean Vehicle Provisions
To the Department of the Treasury on the clean vehicle provisions within the Inflation Reduction Act and on related tax credits for suppliers of critical minerals and electric vehicle batteries.
Introduction
In the comments below, we first detail why the vehicle tax credit may not entirely benefit the car buyer, as critical mineral suppliers, battery manufacturers, vehicle manufacturers and dealers may be able to capture some, if not all, of the economic incidence of the tax credit. We also discuss how the tax credits for eligible suppliers of batteries and critical minerals going into them may lead mainly to increased profits for those suppliers for an uncertain but potentially significant amount of time. We next describe information that can be gathered by the agencies to allow for ex-post analyses of the tax credits. Analyzing the economic incidence of the tax credits, and the ability for the credits to reduce the differences in electric vehicle ownership across income and race/ethnicity, will be key to ensuring that the Administration’s equity goals as defined by the Justice40 Initiative are met. Furthermore, by conducting these analyses, government agencies will be able to achieve key learnings that can help in structuring future rounds of clean vehicle incentives to achieve equitable, efficient, and effective investments.
