What's trending: Cars and vans were responsible for approximately 8% of direct CO2 emissions worldwide in 2021, according to the International Energy Agency (IEA). In many jurisdictions, the focus on reducing vehicle emissions supports efforts to achieve CO2 reduction targets under the Paris Agreement and to respond to the urgent need for action to fight climate change. As part of these plans, policymakers are using mandates and incentives to facilitate electric vehicle adoption.
New rules: Electric vehicle incentives continued in the U.S., notably at the federal level through the IRA. Among its incentives, the IRA includes tax credits to promote consumer and commercial adoption of clean vehicles and for electric charging stations and alternative refueling infrastructure in low-income and rural areas.
Many state and local governments and utility providers across the U.S. offer a wide variety of incentive opportunities, such as cash grants, rebates, or tax credits, to encourage businesses and consumers to invest in electric or hybrid cars and EV infrastructure.
For example, in California, the recently launched Golden State Priority Project provides companies with an opportunity to offset up to $100,000 of the cost for purchasing and installing eligible direct current fast chargers. Last summer California also adopted additional rules that require all new passenger vehicles sold in the state to be zero emissions by 2035.
South Africa adopted an $8.5 billion energy transition package that includes electric vehicle market development.
Proposed rules: The EU reached a provisional agreement last year to require new cars and vans to be zero emissions by 2035, and Canada proposed similar regulations.
What this means: The auto industry must analyze costs, tax incentives and operational capacity to maximize return on investment in their transition to the production and sale of electric vehicles. To address uncertainties, organizations should develop business strategies, shift their operating models and prioritize opportunities to create a roadmap to guide transition. Advisors can help provide reliable, data-driven insights to take advantage of emerging trends and set a strategic course forward. Advisors can also help organizations across industries identify incentive programs for electric vehicles and charging infrastructure and apply for those programs.