US fleets get tax breaks for EU-built EVs

Fleet operators in the United States (US) who buy an electric commercial vehicle made in the European Union can take advantage of the same tax advantages as if the vehicle were made in the US, following a new agreement between the European Commission (EC) and US.

Since August 2022 the Inflation Reduction Act has offered businesses generous incentives for buying electric vehicles to support the US’s green transition. These incentives are primarily tax credits worth up to $7,500 for qualified vehicles with a gross vehicle weight of under 14,000 pounds (6,350kg) and $40,000 for all other vehicles.

Prior to the agreement, the Commercial Clean Vehicle Credit scheme tax credits were only available to vehicles manufactured in the US, as part of a ‘Buy American’ programme.

Win-win

The EC described the new agreement as a ‘win-win’ and said: “US taxpayers will be able to take advantage of highly efficient EU-made electric vehicles and components, while EU companies that provide their customers through leases with cutting-edge clean vehicles can benefit from the incentives under the IRA.”

Private car negotiations

However, private motorists in the US can still only access the tax credits if they buy electric vehicles assembled in the US, Canada or Mexico, although the EC is seeking to extend the Clean Vehicle Credits to EU-built cars. A joint EU-US task force will continue to seek solutions, with the EU pushing for the same treatment as US free trade agreement partners.

“Discriminating against EU produced clean vehicles and inputs violates international trade law and unfairly disadvantages EU companies on the US market, reduces the choices available to US consumers and ultimately reduces the climate effectiveness of this green subsidy,” said the EC.

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