Ajit Karn
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The IRS’s list of eligible automobiles for the Inflation Reduction Act under the Biden administration stunned proponents of electric vehicles recently (IRA). According to the current list, some variations of well-known battery electric vehicles such as the Tesla Model Y and the Ford Mustang Mach-E are ineligible for the $7,500 federal tax credit offered by the IRA, even though hybrid vehicles like the Jeep Wrangler 4XE are eligible, despite its 20 MPGe and 21-mile all-electric range.
This was done for a good reason—the IRA currently categorises its qualifying cars into two categories: “SUVs/Trucks/Vans” and “All Other.” The maximum price for vehicles in the “SUVs/Trucks/Vans” category is $80,000 and is determined by a number of factors, including weight. The maximum price for those in the “All Other” group is $55,000. In the instance of the Model Y Dual Motor AWD, the version was too pricey to fall under the $55,000 maximum for the “All Other” category and too light to qualify under “SUVs/Trucks/Vans.”
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Rejecting some of the most well-liked electric vehicles in the nation was nothing short of absurd given that the IRA’s $7,500 federal tax credit is partly meant to boost the United States’ dominance in the EV sector. It therefore came as no surprise that supporters of electric vehicles demanded modifications to the IRS’s present requirements in order to make it possible for real EVs that are built for sustainability to be eligible for subsidies.
The Inflation Reduction Act’s EV tax credit system was called into question in a Change.org petition, one of the most prominent initiatives the EV community has so far advocated for. Farzad Mesbahi, a former Tesla employee who is now a YouTube broadcaster, first submitted the petition. He remarked that the existing system, which disqualifies EVs like the Model Y in favour of hybrids, is utterly absurd. With a total of 44,849 signatures as of this writing, the petition has received a lot of support.
According to the Change.org petition, the IRA’s existing EV incentive structure is at best careless or ineffective and at worst corrupt. The petition therefore proposed two options for the IRA: either eliminate incentives for all hybrid vehicles and limit them to pure electric vehicles such as the Ford Mustang Mach-E and the Tesla Model Y, or have the system fairly apply its SUV or non-SUV regulations. Ironically, the Model Y was effectively barred from the $7,500 federal tax credit offered by the IRA due to technicalities, despite the fact that the NHTSA and EPA have classified the car as a small SUV.
Elon Musk, CEO of Tesla, has criticised the IRA’s existing incentive scheme, saying it is strange that the Model Y is being “punished” for being “too mass-efficient.” Musk also requested feedback on the IRA’s present EV incentive programme from fans of electric vehicles. It should be emphasised that Musk has stated in the past that he is opposed to EV incentives in general; nonetheless, the CEO is advocating for fair guidelines now that one is coming.
