How the Inflation Reduction Act Will Impact the Electric Vehicle Industry

This Guidehouse report analyzes the requirements and incentives laid out in the IRA; forecasts the impact on the US PEV market; specifies who benefits among manufacturers and consumers; and gives recommendations for automakers and suppliers.

Table of Contents

1. Spark

2. Context

3. Recommendations

4. How Has the Inflation Reduction Act Changed Clean Vehicle Credits?

• 4.1 Volume Caps on PEV Sales Have Been Eliminated
• 4.2 Local Content Requirements Have Been Added
• 4.3 Critical Minerals Requirements Will Be a Challenge
• 4.4 Income and Price Limits Have Been Added
• 4.5 Credit Transfers Have Been Added
• 4.6 Incentives for Used PEVs Have Been Added
• 4.7 Medium and Heavy Duty Vehicles

5. Changing Production Plans, Not Product

• 5.1 What Is the Impact on Automakers?
• 5.2 More Lithium Iron Phosphate Is Expected
• 5.3 Automakers May Leverage the Software-Defined Vehicle
• 5.4 Long-term Impact on the Market Is Likely Positive
• 5.5 What Must Automotive Suppliers Do?
• 5.6 Which Vehicles Qualify?
• 5.7 Which Consumers Win and Lose?
• 5.8 Which Manufacturers Win and Lose?
• 5.9 Accelerate Local PEV and Battery Production and Reduce Cost

6. Appendix

• 6.1 Countries That Have Free Trade Agreements with the US
• 6.2 Critical Minerals as Defined by the IRA