Outside of the batteries, electric vehicles are manufactured in essentially the same way as standard vehicles, so most of the emissions deficit is caused by the energy it takes to make the batteries that EVs rely on. Manufacturers and governments are aware of this and are doing what they can to make the process a bit greener. Although it was poorly implemented, it’s obvious to see what the U.S. government was trying to do with the EV tax credit scheme that was bundled in with the inflation reduction act. The credits are now tied to where the vehicle’s batteries are produced and the origins of the materials used in the production process.
For a vehicle to qualify for the new tax credit, its batteries must be manufactured in the United States, and 40% of the materials used in the batteries have to be sourced from North America or from a country with which the United States has a free trade agreement. Meeting both conditions makes an electric sedan retailing for up to $55,000 — or any other electric vehicle priced up to $80,000 — eligible for a tax credit of up to $7,500. Meeting one of the conditions will only net the buyer half that amount.
However, it is safe to say that qualifying sources will adapt to meet new orders. Certain companies like Tesla and GM are already well placed to manufacture batteries in the U.S., too. While mining the rare-earth metals batteries need may still be an issue, not shipping materials across the pacific and heavy batteries back will save a lot of CO2. Advances in battery technology, supply chain efforts, and battery recycling programs could lead to electric vehicle production becoming a lot greener in the near future.
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