Tesla and Panasonic will receive about $1.8 billion in tax credits in the US in 2023, a forecast shows. The companies will be the biggest winners of the Inflation Reduction Act.
Tesla and its battery partner Panasonic will receive about $1.8 billion in tax credits this year under the Inflation Reduction Act, according to Benchmark Mineral Intelligence. General Motors Co. and LG Energy Solution may qualify for $480 million in tax credits. At the same time, the report shows that Ford would not start receiving any benefits from statutory battery credits until 2025, according to BNN Bloomberg.
The Act gives big incentives to battery suppliers and automakers that manufacture in the US. The more batteries and electric vehicles a company makes in the US, the more money it makes in tax credits. Tesla is a huge winner here, as the company makes some of the most American-made cars in the US, powering many of them with batteries that are also made in the US, at Giga Nevada.
Tesla said it expects to use the money from the tax credit to further lower prices for consumers, as part of a strategy to sacrifice short-term profits to increase sales amid inflation and increased competition. Such a policy forces automakers to also reduce the prices of their cars, which causes additional financial difficulties for them.
While Giga Nevada is already a huge benefit to Tesla, the company is also continuing to ramp up its efforts to localize the supply chain for battery manufacturing. Its new Lithium Refinery in Corpus Christi recently had a groundbreaking ceremony. Meanwhile, legacy automakers waking up from years of dormancy are just beginning to make efforts in this area, so they would not be able to get benefits from the IRA as quickly as Tesla.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.