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This Plan Could Break The EV Market
- There are three federal electric vehicle tax credits in the US - $7,500 rebate for clean-car purchases (30D), a $4,000 program for secondhand EVs (25E), and a commercial clean-vehicle credit (45W).
- The credit for clean-car purchases has been promoting EV adoption since Obama's term, while the commercial credit has fueled an EV-leasing boom.
- 53% increase in EV leases was seen post the 2022 Inflation Reduction Act.
- Leasing has played a crucial role in promoting EV adoption and has contributed to record EV sales in recent years.
- EVs must meet certain criteria to qualify for the federal tax credits, leading to limitations on which cars and buyers are eligible for the rebates.
- Leasing companies claim the commercial-vehicle credit, allowing lessees to benefit from discounted payments on a wide range of EVs.
- Proposed termination of commercial and used EV credits after December 31 could impact EV market demand, with potential for a surge followed by a slowdown.
- Amid ongoing discussions in Congress, the fate of these EV tax credits remains uncertain, raising concerns about future EV adoption without the incentives.
- Despite potential setbacks, innovation and market dynamics are expected to drive long-term growth in the electric vehicle sector.
- EV adoption may face challenges without the current tax credits, but the industry is projected to evolve and grow over time.
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