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Incentivizing and Supporting Deployment of Clean

Vehicles

The transportation sector is the largest source of greenhouse gas emissions in the United States,
accounting for 27 percent of all emissions in 2020. Transportation also is a major source of
smog-forming nitrogen oxides and particulate matter, which can trigger asthma attacks and other
health problems for the most vulnerable among us. President Biden set a goal that at least 50
percent of all new passenger cars and light trucks sold in 2030 be zero-emission vehicles,
including battery electric, plug-in hybrid electric, or fuel cell electric vehicles (EVs). In October
2022, President Biden announced the American Battery Materials Initiative, a new effort to
mobilize the entire government in securing a reliable and sustainable supply of critical minerals
used for power and electric vehicles. The Inflation Reduction Act tackles these priorities
comprehensively, by combining incentives for consumers and businesses to purchase clean
vehicles with programs to expand manufacturing and sourcing of vehicle components and critical
minerals in the United States.

The investments in the Inflation Reduction Act build on the $7.5 billion provided by the
Bipartisan Infrastructure Law to deploy a national network of 500,000 electric vehicle chargers;
more than $7 billion to ensure domestic manufacturers have the critical minerals and other
components necessary to make EV batteries; and $10 billion for clean transit and school buses at
the Department of Transportation and Environmental Protection Agency. The CHIPS and
Science Act invests in expanding America’s manufacturing capacity for the semiconductors used
in electric vehicles and chargers. Together, this package of legislation will create good jobs along
the full supply chain for the automotive sector, from components and equipment manufacturing
and processing to final assembly, and incentivize the development of reliable EV battery supply
chains. It also will reduce greenhouse gas emissions and other air pollutants from cars and
trucks, which have a disproportionate impact on the air quality in low-income communities and
communities of color.

Funding Overview

The Inflation Reduction Act provides billions of dollars in consumer incentives to put more clean
vehicles on the road and commits to making more of those vehicles and their components in the
United States. Highlights include:

• Clean Vehicle Credit for consumers purchasing new qualifying clean vehicles, including
battery electric, plug-in hybrid, or fuel cell electric vehicles. To qualify for the maximum
$7,500 credit, the vehicle must meet certain standards for North American assembly; the
battery’s components must meet certain standards for manufacturing or assembly; and the
battery’s critical minerals must meet certain requirements for sourcing or processing in
the United States or from trusted trade partners.

• Previously-Owned Clean Vehicles Credit to support used vehicle buyers who choose to
go electric. Most families in the United States buy used, and this first-of-kind credit of up
to $4,000 will make it more affordable to go electric and save money at the pump.

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