BlueGreen Alliance | EV Deployment, Auto Manufacturing, & Supply Chain

EV Deployment, Automotive Manufacturing, & Supply Chain

In the United States, the transportation sector represents the single largest source of climate-warming greenhouse gas emissions—surpassing industrial emissions and emissions from energy generation, residential and commercial buildings, and the agricultural sector. While reducing emissions from vehicles must not be the only strategy we pursue in our efforts to decarbonize our mobility systems, we cannot meet our climate goals without a significant transition to cleaner cars and trucks.  The Inflation Reduction Act applies a whole-of-government approach to addressing this source of greenhouse gas and health-harming emissions, while also creating and preserving good union jobs; supporting and growing a domestic supply chain for vehicle components and technologies; and improving mobility and air quality in our neighborhoods.

The Inflation Reduction Act contains clean vehicle tax credits for new and used car buyers—as well as commercial fleets—and puts ambitious-but-achievable requirements on qualifying vehicles’ critical mineral and battery supply chains. It brings those supply chain requirements within reach for car and truck manufacturers—who have already made significant commitments to onshoring their battery supply chains—through major investments in the domestic auto manufacturing supply chain. Finally, it provides direct grants to a range of heavy-duty fleets to replace their existing vehicles—including transit and school buses, logistics trucks, drayage vehicles, and U.S. Postal Service (USPS) delivery vans—with zero emission alternatives.

The clean vehicle provisions in the Inflation Reduction Act can be divided into three main categories: tax credits, grants and loans for clean vehicle manufacturers, and grants for heavy-duty fleet electrification.

  • Clean Vehicle Related Tax Credits: The updated Clean Vehicle Tax Credit will shape the future of the global auto manufacturing sector. The credit brings down the cost of buying battery and fuel cell EVs by up to $7,500, while incentivizing the establishment of a complete and resilient supply chain for essential battery components in North America. It also ensures that the critical minerals that comprise these batteries are not sourced from countries relying on child and forced labor, and with whom ongoing political tensions risk significant clean vehicle and battery supply chain bottlenecks (see sidebar). The Commercial Clean Vehicle Credit aids fleets to purchase clean light- and heavy-duty vehicles by defraying the incremental upfront cost of purchasing a clean vehicle versus an internal combustion engine (ICE) alternative—an essential provision for communities disproportionately impacted by the local air pollutants emitted by diesel-fueled trucks, delivery vans, and work trucks. Finally, the Alternative Fueling Property Credit helps individuals and businesses install EV charging and alternative fueling equipment to supplement the significant investments made by the BIL in a nationwide EV charging network.
  • Clean Vehicle Manufacturing Investments: The Advanced Technology Vehicle Manufacturing (ATVM) Loan Program received an additional $3 billion, which will unlock billions of dollars in private capital for manufacturing facilities building the technology we need to achieve climate goals and reduce emissions from all transportation sectors—from light-duty cars to airplanes. The Domestic Manufacturing Conversion Grants Program also supports the auto manufacturing sector, but is targeted to provide direct grants to recently closed or at-risk facilities. The Inflation Reduction Act provides $2 billion for this program—which will fund the retooling efforts needed to transform production lines that were building ICE vehicles and their parts into production lines building the clean vehicles of the future.
  • Medium & Heavy Duty Fleet Electrification: The Inflation Reduction Act allocates a total of $7 billion through several programs to reduce local air pollutants and climate-warming greenhouse gas emissions from heavy-duty vehicles. It takes an expansive approach to heavy-duty vehicle decarbonization and  $1 billion in grants to the U.S. Environmental Protection Agency (EPA) to encourage the private sector to electrify Class 6 and 7 trucks, and $3 billion to EPA to reduce emissions from ports, including through the purchase and deployment of zero emission drayage vehicles. The law also allocates $3 billion to electrify the USPS delivery fleet.
Category Program Name and Description Funding Level Administering Agency or Office Funding Mechanism Timeline Labor, Equity, and Domestic Content Standards in Text Eligible Entities New or Existing Program
Auto Supply Chain Manufacturing Grants & Loans Advanced Technology Vehicle Manufacturing Loan Program (ATVM) (Sec. 50142) – Provides direct loans to manufacturers to re-equip, expand, or establish facilities that produce clean vehicles (light-, medium-, or heavy-duty) and their components, as well as trains and locomotives, maritime vessels, aircraft, and hyperloop technology.

Eliminates the cap (previously $25 billion) on loans from the ATVM.

$3 Billion DOE Direct Loans FY2022-FY2028 Prevailing Wage for Construction Work Facilities manufacturing: fuel efficient light, medium- and heavy-duty vehicles, maritime vessels, trains, aircraft, and hyperloop technology, and facilities manufacturing parts for any of the above vehicles Existing Program
Auto Supply Chain Manufacturing Grants & Loans Domestic Manufacturing Conversion Grants (Sec. 50143) – Provides grants to support the domestic production of EVs, hybrids, plug-in hybrid electric vehicles (PHEV), and hydrogen fuel cell vehicles, especially in recently closed or at-risk facilities. $2 Billion DOE Competitive Grant FY2022-FY2031 Prevailing Wage for Construction Work Facilities manufacturing: EVs, hybrids, PHEVs, and hydrogen fuel cell vehicles Existing Program (First Time Funding)
Clean Vehicle
Tax Credits
Clean Vehicle Tax Credit (30D) (Sec. 13401) – Encourages the deployment of clean vehicles made in North America with batteries made with North American-manufactured components and critical minerals sourced from countries with which the United States has a free trade agreement. $7.5 Billion Treasury (IRS) Consumer Tax Credit Jan 1, 2022-Dec 31, 2032 Final Assembly and Component Conditions; AGI and MSRP Caps Individuals, the tax credits can be transferred to the auto dealer Existing Program
Clean Vehicle
Tax Credits
Used Clean Vehicle Tax Credit (25E) (Sec. 13402) – Accelerates the creation of a secondary market for EVs in order to extend EV access and improve affordability for low-income drivers. $1.3 Billion

Tax credit of 30% of the vehicle cost or $4,000, whichever is less

Treasury (IRS) Consumer Tax Credit Jan 1, 2022-Dec 31, 2032 AGI and Sale Price Caps Individuals, the tax credits can be transferred to the auto dealer New Program
Clean Vehicle
Tax Credits
Commercial Clean Vehicle Tax Credit (45W) (Sec. 13403) – Accelerates the deployment of clean vehicles for commercial and other fleets. $3.6 Billion

Tax credit of 15% of the vehicle cost (30% for a pure EV), but not more than the incremental cost of above what a comparable powered solely by gasoline or diesel would cost

Treasury (IRS) Consumer Tax Credit Jan 1, 2022-Dec 31, 2032 N/A Commercial uses New Program
Clean Vehicle
Tax Credits
Alternative Fueling Property Credit (30C) (Sec. 13404) – Provides a tax credit of up to $100,000 per property for the installation of EV charging or alternative fueling infrastructure for ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas or hydrogen. $1.7 Billion

The base tax credit is 6%, but it increases to 30% if the wage and apprentice requirements are satisfied

Treasury (IRS) Consumer Tax Credit Jan 1, 2022-Dec 31, 2032 Restricted to low-income and rural areas; Additional credit for projects guaranteeing prevailing wage for workers and apprentice labor hours Individuals, Commercial Entities Existing Program
Alternative Fuel Credits Extension of Incentives for Biodiesel, Biodiesel Mixtures, and Renewable Diesel (40A) (Sec. 13201) – Extends the $1/gallon production tax credit for biodiesel, biodiesel mixtures, and renewable diesel, with an additional $0.10/gallon credit for small agri-biodiesel producers. $5.6 Billion Treasury (IRS) Production Tax Credit Until Dec 31, 2024 N/A Producers of biodiesel, biodiesel mixtures, and renewable diesel Existing Program
Clean MDV/HDV Deployment Extension of Alternative Fuel Credit (6426) (Sec. 13201) – Extends the $0.50/gallon production tax credit for alternative fuels, including liquified petroleum gas, CNG/LNG, liquified hydrogen, and others (not including alcohol-based fuels). $ 5.6 Billion Treasury (IRS) Production Tax Credit Until Dec 31, 2024 N/A Producers/vendors of qualifying alternative fuels for use in motor vehicles, motor boats, or aviation Existing Program
Clean MDV/HDV Deployment Clean Heavy Duty Vehicles (Sec. 60101) – Provides grants to support the replacement of eligible vehicles with zero emission class 6 and 7 vehicles, the purchase, installation, operation, or maintenance of charging or fueling infrastructure, and the provision of workforce development and training to support zero emission vehicle adoption. $1 Billion EPA Competitive Grant FY2022-FY2031 $400 Million reserved for grantees in non-attainment areas for any air pollutant States, municipalities, Tribes, non-profit school transportation associations, entities that sell or lease zero emissions vehicles (ZEVs) or charging/fueling equipment New Program
Clean MDV/HDV Deployment Grants to Reduce Air Pollution at Ports (Sec. 60102) – Awards rebates and grants to purchase or install zero emission port equipment and technology, conduct planning and permitting activities, and develop climate action plans at ports. $3 Billion EPA Competitive Grant, Rebate FY2022-FY2027 $750 Million reserved for grantees in non-attainment areas for any air pollutant Port authorities, state, regional, local, or Tribal agencies with jurisdiction over port authorities or ports, air pollution control agencies, and private entities that: apply in partnership with any of the aforementioned entities, or own, operate, or use the facilities, cargo handling equipment, transportation equipment, or related technology of a port New Program
Clean MDV/HDV Deployment USPS Clean Fleets (Sec. 70002) – Deposits funding to the Postal Service Fund for the purchase of zero emission delivery vehicles and the purchase, design, and installation of ZEV infrastructure. $3 Billion USPS Deposit to Postal Service Fund FY22-FY31 N/A USPS New Program
Transit and Mobility Neighborhood Access and Equity Grant Program (Sec. 60501) – Awards grants to state and local governments to improve community walkability and connectivity through the removal, retrofitting, or replacement of roads and highways. $1.893 Billion DOT (FHWA) Competitive Grants FY22-FY26 $1.262 Billion reserved for projects including those serving DACs, those with CBAs, and those with anti-displacement policies or community land trusts States and Territories, Tribes, Units of Local Government, Political Subdivisions of a State, MPOs, Special Purpose Districts and Public Authorities with a Transportation Function, Non-Profits and Higher Ed in partnership with any of the above New Program

Ethical Extraction of Critical Minerals

The critical minerals needed to produce the batteries and technology needed to transform the vehicles sector  include lithium, cobalt, manganese, nickel, graphite, and aluminum, among many others. The processes and labor practices with which these minerals are extracted have attracted the attention of labor advocates and humanitarian watchdogs globally, who have surfaced the use of child and forced labor in many of the major countries supplying critical minerals for EVs. The single most important vehicle technology of the future cannot be intertwined with these practices. The 30D critical minerals credit incentivizes manufacturers to source critical minerals from countries with which the United States has free trade agreements, or invest their own resources in North American mining and battery recycling capacities.

The critical minerals credit does not preclude our need for a new national commitment to responsible mining in addition to the reclamation and recycling of these minerals and materials. At present, the United States lacks a comprehensive strategy for responsibly mining these materials at home; for developing secure and sustainable supply chains for their incorporation into the clean energy economy; and for leading through example—in cooperation with other nations that seek to mine and develop these resources in safe, environmentally, and socially responsible ways. Responsible mining practices ensure that economic benefits are:

  • shared with workers and communities;
  • prioritize community and worker safety;
  • actively engage with stakeholders to obtain social license; and
  • minimize environmental impact.

Responsible domestic mining would help us build out clean technology supply chains here in North America and serve as an anchor for reshoring and retaining domestic manufacturing.