With increasing gasoline prices coupled with reported environmental pollution issues, renewable sources of energy are emissions. In this regard, solar and electric vehicles are becoming increasingly popular in the US.
This blog delves into various aspects like the current state of EVs in the US, California ZEV regulations, EV tax credits, power grid issues, and more.
Electric Vehicles in the US, Currently
Electric Vehicles are the cleaner and greener mode of transport compared to traditional gas-powered cars and trucks. These vehicles use electricity from solar power grids but of course the environmental benefits vary depending on how and if a state supplies this resource. EV is equivalent to a gas-powered vehicle using 88 miles per gallon. States like California, Iowa, and Kansas, EV offer cleaner and environment-friendly options.
In the upcoming sections, we look at some parameters such as Califorrnia regulations, EV tax credits and more which are important not only for potential buyers but for auto dealers too.
California ZEV Regulation – A Step Towards EV Adoption
According to California’s Zero-Emission Vehicle (ZEV) regulation, by 2035, 100% of its new cars and trucks sold in California will be zero-emission based, including plug-in hybrid electric vehicles(PHEVs). The regulation aims to bring ZEVs to more communities and offers incentives to the widest economic groups in California, including low and moderate-income customers. In addition, the regulation includes measures to enhance equity in the transition to ZEVs and provides assurance to the customers on the long-term benefits of durability, sustainability, and quality of these cars, buses, and trucks and the batteries they would run on.
Road transportation plays a key role in contributing to environmental pollution. That said, the regulation mentions that by 2037, it will deliver a 25% reduction in smog-causing pollution from light-duty vehicles and meet the air quality standards.
The regulation takes appropriate steps to ensure that the EVs offer full replacements to their gasoline vehicles, maintain the market value for the owners, and used car buyers get a high-quality vehicle, free from causing pollution.
EV tax credits
In August 2022, the Inflation Reduction Act was passed, allowing US electric vehicle buyers to get thousands of dollars of tax credits. While the idea of earning tax credits looks promising there are caveats.
EV tax credits eligibility depends on various factors like whether you bought a new EV or a used car, when you buy it, from where its parts were sourced, who are the manufacturers, and more. Consumers who buy a new EV get a tax credit up to $7500 as opposed to used vehicles, which typically is $4000. Besides, some consumers may get benefits from state or local governments, where rules already exist.
Regarding consumers, there are constraints based on the price of the car and the buyer’s income. It says for new vehicles, manufacturers’ suggested retail price must be below $55,000 for Sedans and below $80,000 for SUVs for credit eligibility. Also, the buyer must have adjusted gross income less than $150,000 for single filers, $300,000 for married couples filing together, and $225,000 for those filing as head of the family.
As a result, many consumers are skeptical about whether they would receive these tax credits. Many tax breaks existing in the tax code were extended to 2022 and the new requirements to receive the greatest tax breaks aren’t expected until 2023 or even later.
In addition, the EV tax credits bill limits eligibility for tax credit to vehicles manufactured in North America whose batteries or materials are sourced from the U.S. or its free trade partners. At present, many car manufacturers including Tesla depend on battery materials made in China, which raises concerns. Any vehicle not assembled in the U.S, Canada, or Mexico is not eligible for a tax credit.
Power Grid Issues in California – A key concern
Due to the record-setting heat wave, California’s power grids are facing serious problems. The heat wave resulted in pushing the grid to the brink, causing blackouts, and forced people to conserve electricity for over eight days.
Electric vehicles are certainly becoming a norm in some parts of the US. We recommend auto dealers stay on top of regulations and EV tax credits so you can confidently inform your customers and make sound business decisions. We’re here to discuss your business coverage: https://familyinsurancellc.com/auto-dealer/