The number of automakers criticizing the Inflation Reduction Act is growing by the day, although there's nothing they can really do about it as the tax, health and climate bill passed the House of Representatives on August 12.
Now there's only one thing missing for the bill to become legislation: the signature of US President Joe Biden, which the White House announced it is coming this week.
The Inflation Reduction Act makes any electric vehicles assembled outside North America ineligible for tax credits, drawing criticism from the European Union, South Korea and many automakers. There is a loophole that allows customers to qualify for the old federal tax credits if they have binding contracts for vehicles not yet delivered when Biden signs the legislation.
However, once the President signs it, the new tax credit requirements go into effect immediately, which means EV reservation holders of affected vehicles in the US have only days—if not hours—to sign binding agreements with automakers.
Meanwhile, Audi of America, Kia and Porsche said that buyers of their electric vehicles in the United States will lose access to federal tax credits of up to $7,500 once President Biden signs the $430 billion bill. Audi said the legislation "will have consequential impact on our business and our consumers," adding that only its plug-in hybrid models will retain the existing federal credit through the rest of the year.
Gallery: 2022 Kia EV6 (US)
Kia adopted a similar tone, saying in a letter to its US dealers that the bill makes all of its EV and plug-in vehicles ineligible for tax credits once it is signed unless customers have written binding contracts.
As a result, the Korean automaker urged dealers to reach out to customers on waiting lists to enter into contracts before Biden signs the bill. The letter called the "sudden change" in EV tax policy "very disruptive to our business and unfortunately for our customers."
Porsche also said that buyers of its all-electric Taycan and plug-in hybrid Cayenne and Panamera vehicles will also immediately lose eligibility once the bill becomes law. A Porsche Cars North America spokesperson was quoted as saying by Automotive News that the credit eligibility of customers with reservations "depends on individual sales agreement, which is a matter between them and their independently owned and operated Porsche dealership."
Last week, the Alliance for Automotive Innovation, a trade group that represents Volkswagen Group, General Motors, Toyota and Ford among other carmakers, warned the law would make 70 percent of 72 US full-electric, plug-in hybrid and fuel cell EVs that currently qualify ineligible upon Biden's signing the law.
Furthermore, when the new bill's additional income and price caps and battery and critical mineral sourcing rules take effect on January 1, 2023, "none would qualify for the full credit."