Jun 5

Driving Change: The Inflation Reduction Act’s 25E Tax Credit and the Pre-Owned EV Market

In a significant milestone for the automotive industry, the White House and the Treasury Department recently convened with private sector leaders, clean car advocates, and government officials to celebrate the strides made possible by the Inflation Reduction Act’s 25E used clean vehicle (EV) tax credit. This event marks a pivotal moment in the promotion of clean energy adoption and economic relief for American consumers.

The centerpiece of the gathering was the recognition of the momentum generated by the 25E tax credit, which offers up to $4,000 off qualified electric vehicles for eligible taxpayers. Notably, this credit extends its benefits to a wide range of individuals, including those falling below certain income thresholds—$75,000 for individual taxpayers and up to $150,000 for married couples filing jointly.

One of the most compelling aspects of the 25E tax credit is its focus on the pre-owned vehicle market, acknowledging that the majority of Americans opt for used cars over new purchases. By providing this incentive for used clean vehicles, the credit significantly reduces barriers to entry for electric vehicle (EV) ownership, making sustainability more affordable and accessible to everyday consumers.

A key highlight of the event was the announcement of significant voluntary commitments from various companies aimed at furthering the adoption and utilization of the tax credit. These commitments range from integrating the credit into e-commerce platforms to developing educational tools and resources for consumers. Among the notable commitments are:

Carvana: Integrating the tax credit into its e-commerce experience, enhancing transparency and enabling instant savings at checkout.
CarMax: Highlighting eligible vehicles on their website and facilitating easy searches for federal Used Vehicle Tax Credit options.
Recharged: Simplifying the EV buying process with a comprehensive platform focused on education, buying, financing, and charging.
Incentivize: Expanding partnerships to make the EV Rebate Calculator more accessible to consumers for federal, state, and local EV tax credit information.
Recurrent: Publishing vehicle eligibility for rebates in its reports, accelerating used EV adoption by aiding shoppers in finding rebate-eligible inventory.
ZETA: Developing consumer-oriented educational materials to raise awareness and promote EV adoption.
Maritz Automotive Solutions: Conducting training sessions nationwide to enhance competencies in EV product knowledge, charging solutions, and rebate management.
American Express Global Business Travel: Advising corporates on integrating EVs into their travel programs and corporate fleets.
Sierra Club: Hosting events and developing materials to ensure drivers understand eligible tax incentives for EVs, crucial for cost savings and environmental goals.
Plug In America: Collaborating with Google to develop an identifier for clean vehicle dealers and maintaining a directory of participating retailers.
Environmental Defense Fund: Training companies on fleet electrification through the Net Zero Action Accelerator hub.
Plug In America and Recurrent Auto: Partnering to maintain a public directory of participating retailers and ramping up PlugStar used EV sales training.

These commitments underscore the collective effort across industries to drive meaningful change in the automotive landscape, promoting sustainability and economic prosperity. By incentivizing the purchase of clean vehicles and streamlining the process for consumers, the Inflation Reduction Act’s 25E tax credit sets a precedent for future initiatives aimed at accelerating the transition to a cleaner, greener future.

Source: White House, June 5th 2024