Senator Warnock’s bill would allow foreign automakers like Hyundai to qualify for EV tax credit

Senator Warnock’s bill would allow foreign automakers like Hyundai to qualify for EV tax credit

Automobile manufacturers like Hyundai are expected to get a “grace period” to build and assemble electric vehicles (EVs) in North America so that more EVs could qualify for the federal government’s tax credit/incentive, thanks to a new bill introduced by Georgia Senator Raphael Warnock.

The newly introduced Affordable Electric Vehicles for America Act aims to help more EVs qualify for a tax credit through the Inflation Reduction Act (IRA). The new bill aims to trim down the costs of owning an EV by allowing more foreign automobile companies to manufacture vehicles in the U.S., especially in the state of Georgia – a hot spot for vehicle manufacturing activity. In May, South Korean manufacturer Hyundai announced that it would invest more than $5.5 billion to build its first dedicated EV plant in Bryan County, Georgia.

In the month of August this year, the IRA bill was passed by the U.S. lawmakers to provide a number of incentives and rebates to boost the pace of the U.S. automobile market’s transition from internal combustion engines to clean, sustainable vehicles. Most notably, the tax credit for EVs provides tax credit of up to $7,500 for new EVs and $4,000 for used EVs.

However, foreign manufacturers become eligible only if they meet requirements like completion of final assembly in North America (the U.S. and Canada). Many EVs, which are not assembled in North America, thus fail to qualify for the IRA benefits.

Senator Warnock’s bill would delay the IRA’s phase-in period for vehicle manufacturers to meet the EV battery and manufacturing-related requirements, making Hyundai and other foreign manufacturers eligible for the federal government’s tax credit.

Introducing the bill, Warnock explained, “I’m focused squarely on helping Georgia car buyers save money and helping car manufacturers who do business in our state thrive. The Affordable Electric Vehicles for America Act will lower costs for Georgians and provide consumers more options when purchasing an electric vehicle, while also supporting good-paying jobs across our state…”

While experts are of the view that the Affordable Electric Vehicles for America Act faces long odds of passing, Warnock remains confident that the legislation would help Georgians and Georgia economy immensely.

As per the new legislation, the battery provision and manufacturing requirements would be extended to 2025 and 2026, respectively, allowing a number of EVs to qualify for the tax credit. Hyundai’s Bryan Country EV-dedicated plant in Georgia is expected to become operational by 2025.

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