On January 1st, the United States will introduce incentives for delivery companies and other businesses to switch to electric trucks as part of a broader effort to keep gas and diesel vehicles off our roads and neighborhoods.
The first incentive of its kind, established under President Joe Biden’s Inflation Reduction Act (IRA), offers tax credits of $7,500 or $40,000 depending on the size of the electric vehicle. Carriers such as FedEx and Amazon.com can buy many electric trucks for $7,500.
These tax credits can be combined with voucher programs in California, New York and other states that are spending billions of dollars trying to convince businesses to switch to zero-emission vehicles.IRA Commercial EV Credits has no US-made regulations that apply to passenger vehicles.
The US transportation sector, including heavy and light trucks, buses, and planes, accounts for more than one-third of the greenhouse gases produced in the United States.
An increase in climate change-related floods, hurricanes and droughts this year has forced governments and businesses to look more closely at their exposure to financial risks and liabilities.
Incentives should help bring EV stickers closer to parity with conventional gasoline vehicles, experts say.
“It will help level the playing field for electric vehicles,” said Ben King, associate director of research firm Rhodium Group.
Jim Farley, CEO of electric van maker Ford Motor, predicted this year that the IRA tax credit would have a “dramatic impact on EV adoption.”
Experts say more commercial EV purchases should bring down manufacturing costs and vehicle sticker prices, attracting even more buyers.
“We are at an inflection point,” said Jim Cheng, vice president of public policy at Rivian, which runs Amazon-branded EVs in more than 100 U.S. cities. Amazon told Reuters in an email that it hopes the IRA will “transform our collective approach to reducing carbon emissions across the sector.”
Travis Katz, CEO of BrightDrop, a General Motors company that serves FedEx, Walmart and DHL Express Canada, said:
Paul Rosa, senior vice president of procurement and fleet planning at Penske Truck Leasing, said EV incentives may encourage early adopter purchases, but aren’t enough to lure customers en masse from the sidelines. . That’s because they haven’t closed the gap between sticker prices and costs, which can involve onerous rules, he said.
“I still can’t cross the finish line,” Rosa said.