Many automakers and the government of South Korea want the Biden administration to use a commercial electric vehicle tax credit to make it easier for consumers to buy EVs. This could help ease concerns about a climate bill that was passed in Congress.
The $430 billion U.S. Inflation Reduction Act (IRA), which was signed into law in August, ended tax credits of $7,500 for electric cars made outside of North America. This made South Korea, the European Union, Japan, and other countries angry.
Some automakers say that an IRA provision for “commercial clean vehicles” that doesn’t get as much attention could be used to help EV manufacturers and address concerns from other countries.
Related: Inflows of foreign money into Asian stocks are at their highest level in two years.
Rivian Automotive, Hyundai Motor, and Kia Corp., among others, want the administration to let consumer vehicle leasing qualify for the commercial EV tax credit, which could lower monthly lease payments.
In comments made public on Tuesday, the South Korean government asked Treasury to “interpret ‘commercial clean vehicles’ broadly” to include rental cars, leased cars, and cars bought for use in Uber (NYSE:UBER) or Lyft (NASDAQ:LYFT) fleets.
South Korea also asked Treasury not to put any budget limits on tax credits for commercial vehicles from now until 2025.
Hyundai and Kia want the Treasury to let people who lease EVs get a tax credit of up to $4,000 if they buy a used EV when their lease is up.
The IRA consumer EV tax credit puts a lot of restrictions on where minerals and parts for batteries can come from. It also sets income and price limits for qualifying vehicles and tries to get China to stop supplying minerals or parts for batteries.
Commercial credit does not have the same restrictions on where the money comes from or how much it costs, but it does have an “incremental cost” eligibility test that could be hard to understand. Some car companies want the Treasury to make it easier to make sure that most commercial light-duty vehicles are eligible for $7,500 in tax credits.
Last week, President Joe Biden said, “There are small changes we can make that would make it much easier for European countries to join.”
Some automakers don’t want commercial credit to be used for sales to consumers.
Toyota Motor (NYSE: TM) Corp. stated, “The lack of eligibility criteria for (commercial credits) could jeopardise the IRA’s plans to increase domestic production of EV batteries and maintain America’s energy independence.”
Tesla (NASDAQ:TSLA) said that commercial credits “should apply only to commercial end-users” and that consumer tax credits “should apply only to individual end-users.”
Related: After an expected 563 deliveries between January and November, insiders are reviewing the Airbus 2022 objective.
General Motors (NYSE: GM) CEO Mary Barra told Reuters on Monday, on the sidelines of an event, that dealing with foreign worries about the credit is “more complicated than just doing one thing to solve it.” She also said that it is important to “stick to the intent of the bill” that Congress wrote.
