EV Tax Credit Restrictions Could Reshape Automakers' Supply Chains, Battery Strategies

First Up 08/15/22

EV Tax Credit Restrictions Could Reshape Automakers' Supply Chains, Battery Strategies

Automakers had hoped for an electric vehicle tax break that is available to the broadest range of vehicles and consumers as they look to spur interest and grow the mass market for EVs in the U.S. That's not what they're getting. Instead, the revamped EV tax credit provisions in the Inflation Reduction Act could delay or block access to the credit for years, as it imposes new restrictions on where the critical minerals used in batteries are extracted or processed, where battery components are made or assembled and where final assembly of the vehicle occurs. Once the act is signed into law by President Biden, it could take at least four years for vehicles to be eligible for the full credit, estimates Mark Wakefield, global co-leader of the automotive and industrial practice at consulting firm AlixPartners. "And that's not going to be a flood," Wakefield told Automotive News. "That would be the first vehicle that would have been designed and developed and launched that's target-optimized to come in under the price limit, to be a lower- cost vehicle, to have the battery supply chain and the other supply chains addressed." Click here for the full story.

Audi, Porsche, Kia Say U.S. EV Buyers Will Lose Tax Credit Under Legislation

Audi of America, Kia Corp and Porsche said on Friday that buyers of its electric vehicles will lose access to federal tax credits of up to $7,500 once President Joe Biden signs a $430 billion climate, health, and tax measure. The Volkswagen AG unit said only the Audi plug-in hybrid electric will retain its existing federal credit through the rest of the year. Audi said the legislation set to be approved by the U.S. House of Representatives on Friday "will have consequential impact on our business and to our consumers." The bill makes any electric vehicles assembled outside North America ineligible for tax credits, which has brought criticism from the European Union, South Korea, and many automakers. The bill does allow credits for customers with binding contracts for vehicles not yet delivered when Biden signs the legislation. Reuters reports Kia said in a letter to its U.S. dealers that the bill means all of its EV and plug-in vehicles will no longer qualify for tax credits once the bill is signed unless customers have written binding contracts. Click here for the full story.

Volvo and JLR Prepare for a New Era of EVs

Volvo and Jaguar are re-imagining their lineups for an electric future, while Land Rover is taking a more measured approach. And EV-only newcomer Polestar is bringing products to reach a larger share of the market. Volvo and Land Rover have enjoyed a product-driven market renaissance in recent years, while Jaguar hopes to spark enthusiasm in its flagging brand with an all-electric portfolio by 2025. Automotive News reports Volvo, the biggest of the three brands, intends to go all-electric by 2030 globally. "We are now looking at things through the lens of electrification," Volvo Cars CEO Jim Rowan said last month. "We are totally focused on battery-electric vehicles." Starting next year, Volvo will launch seven new and redesigned electrified models, including five battery-electric vehicles, the company told dealers in February. The five new battery-electric vehicles include three crossovers. Electric vehicle maker and Volvo-affiliate Polestar is looking for market share as the startup prepares to launch a pair of crossovers in the next couple of years. Jaguar, meanwhile, intends to move further upmarket as it goes all-electric to rival Bentley, Aston Martin, and other ultraluxury brands. Click here for the full story.

Selling Off-Brand Used Vehicles? Tips to Retain Those Buyers

The ongoing new vehicle shortage has many dealerships stocking any used vehicles they can get their hands on. Selling off-brand vehicles is not new, but it’s heating up right now as the consumer frenzy for new and used vehicles continues. CBT News reports with the U.S. Bureau of Labor Statistics reporting the average price of used cars is up 40 percent over last year, those sales are great for your bottom-line, but what about cultivating an ongoing relationship with those buyers?  Driving retention is not a new idea for anyone. Yet, convincing off-brand buyers to return to your store for service and eventually that next vehicle purchase is arguably more difficult than retaining buyers of the brands splashed across your store and website. Off-brand buyers may perceive your service department as only specializing in the primary brands you sell. They may also think of dealerships as more expensive than the independent shop down the street. Retention success depends on debunking these misconceptions. Click here for some ideas you may want to add to the retention strategy you already have.

Experts See Gains in Vehicle Electrification, Fuel Economy

U.S. automakers are making gradual progress in electrifying their fleets, according to a presentation at the recent Automotive Futures 2022 propulsion strategies conference. Automotive Futures surveyed some 50 powertrain experts in June and July, including nine OEMs and 18 suppliers, asking for their battery-electric and hybrid vehicle forecasts. Following earlier surveys dating back to 2006, this year’s sampling of experts predicts BEVs will account for 12 percent of global passenger-vehicle demand in 2025 and 25 percent in 2030, while hybrids will grow to 28 percent and 33 percent. BEVs accounted for 2.9 percent of the U.S. light-vehicle market and about 5.8 percent of the global market in 2021, according to Wards Intelligence data. Meanwhile, the experts expect all categories of hybrids to grow in worldwide market share: plug-in hybrids to 6 percent in 2025 and 9 percent in 2030, full hybrids to 10 percent and 13 percent, and mild hybrids to 9 percent and 10 percent. They expect the share held by spark-ignition vehicles in 2025 and 2030 to fall to 60 percent and 38 percent, respectively. Click here for the full story.

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