January 31, 2023 | Peter Slovik, Stephanie Searle, Hussein Basma, Josh Miller, Yuanrong Zhou, Felipe Rodriguez, Claire Beisse, Ray Minhares, Sarah Kelly, Logan Pierce, Robbie Orvis and Sarah Baldwin
This study estimates the future impact of the Inflation Reduction Act (IRA) on the level of electrification in US passenger car and heavy-duty vehicle sales through 2035. The analysis looked at low, medium, and high scenarios depending on how certain rules are implemented in the IRA and how the value of the incentive is conveyed to consumers. For light duty vehicles (LDVs), it also includes a scenario that takes into account states that may eventually adopt the new California Clean Vehicle Rule (ACC II). For Heavy Duty Vehicles (HDV), states that have adopted the California Extended Green Truck Rule and zero emission vehicle goals are counted.
For light and heavy-duty vehicles, the analysis shows that the adoption of electric vehicles is fast, given the expected reduction in production costs and IRA incentives, as well as national policies. The share of electric vehicles in passenger car sales is expected to range from 48 percent to 61 percent by 2030 and increase to 56 percent to 67 percent by 2032, the final year of the IRA tax credit. ZEV’s share of heavy-duty vehicle sales is expected to be between 39% and 48% by 2030 and between 44% and 52% by 2032.
With an IRA, the Environmental Protection Agency can set stricter federal greenhouse gas emission standards for passenger cars and heavy-duty vehicles than would otherwise be possible, at a lower cost and greater benefit to consumers and manufacturers. To meet climate targets, federal standards must ensure passenger car electrification is well above 50% by 2030 and well above 40% of heavy vehicles by 2030.
Estimated Light-duty Electric Vehicle Costs and Benefits for US Consumers, 2022-2035
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