The new requirements for an automaker to qualify for the full $7,500 EV tax credit set a high bar, but General Motors CEO Mary Barra believes the company will get there quickly. Bloomberg reports that on a call with analysts last week, Barra said it should take less than three years for GM EVs to be eligible for the full tax credit.
“We think, out of the gate, we’re going to be eligible for the $3,750, and we’ll ramp to have full qualification in the next two to three years, getting up to the $7,500,” Barra is quoted as saying on the call. “It just takes a couple of years to ramp up based on our expectations with the supply moves that we’ve already made.”
That’s an impressively quick ramp-up and would be a big deal for GM. Under the terms of the Inflation Reduction Act, qualifying EVs must be built in North America to be eligible for the tax credit. For a lot of automakers, that means they’ll have to either build new factories or move EV production to facilities in the U.S., Mexico, or Canada. When the IRA passed, only 30 percent of EVs sold in the U.S. qualified for the $3,750 tax credit.
To get the second half of the tax credit, automakers have to source the raw materials for their batteries from countries that have free-trade agreements with the U.S. That’s likely going to be the biggest obstacle for companies that want their EVs to qualify for the full $7,500. So if GM can actually get there in less than three years, that would likely give it a big advantage over competitors who still won’t qualify even if they move vehicle production to North America.
It would also go a long way toward helping GM meet its goal of selling a million EVs by 2025.