Those incentives, including a tax cut of up to $7,500 for the purchase of a new electric car, could accelerate the U.S. auto industry’s transition to electric mobility, according to Bloomberg.
Earlier this year, it said electric vehicles would make up 43 percent of U.S. car sales by the end of the decade. However, after the Inflationary Reduction Act (IRA) was released in August, expectations rose to 52 percent.
The United States is on track to meet a critical environmental goal set by President Biden, according to a recent estimate. After all, the president indicated last year that electric vehicles should reach at least a 50 percent share of U.S. car sales by the end of the decade.
Last year, electric vehicles accounted for less than 5 percent of U.S. vehicle sales. That puts the U.S. behind the world average of nearly 9 percent. This gap is still wide compared to international market leaders.
Electric cars account for 24 percent of sales in China. Last year, Norway became the first country in the world to sell more cars with electric engines than cars with internal combustion engines.
According to a new forecast from Bloomberg, the U.S. will surpass the global average in four years. That’s two years faster than previous projections.
The Bloomberg report also indicated that the three automakers with the largest planned domestic battery production — Tesla, General Motors and Ford — would benefit most from the new law.
After all, at the urging of Senator Joe Manchin, a Democrat from West Virginia, the Deinflation Act caps the entire $7,500 credit for vehicles assembled in North America. Additional concessions are also being offered for battery manufacturing in North America.
Bloomberg analysts stress that the impact of the new measures will only be known for some time, as carmakers struggle to supply critical raw materials and laws surrounding battery production.
However, those problems are expected to diminish over time, according to analysts. It is added that these evolutions will bring more models of electric cars in affordable categories.
“In the first year, sales may show little evidence of new activity,” said Corey Cantor, electric car analyst at Bloomberg. “However, by the end of this decade, we can expect not only a lower tax burden on electric cars, but also a tax cut on the production of batteries.”
“As a result, the purchase costs of electric cars will experience a sharp drop,” Canter points out.
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