ELECTRIC VEHICLE INCENTIVES IN THE BUILD BACK BETTER ACT

This policy brief by Energy Innovation analyzes the electric vehicle (EV) incentives proposed in the Build Back Better Act (BBB), arguing that these provisions are essential for decarbonizing the transportation sector, boosting domestic manufacturing, and improving public health.

• The Build Back Better Act (BBB) proposes a tiered tax credit for passenger EVs with a maximum incentive of $12,500. This total is composed of a $4,000 base for qualified EVs, $3,500 for vehicles purchased before January 2027, $4,500 for vehicles assembled in the U.S. at a union facility, and $500 for vehicles with at least 50 percent domestic content in component parts and U.S.-manufactured battery cells. The credit is capped by vehicle price: $80,000 for vans, SUVs, and pickup trucks, and $55,000 for other vehicles.
• To ensure incentives reach middle- and moderate-income earners, the BBB proposes income caps of $250,000 for individuals, $375,000 for head of household, and $500,000 for joint filers. Energy Innovation argues these limits should not be reduced further to avoid excluding moderate-income earners who still face financial barriers to EV adoption.
• The BBB includes a 30 percent tax credit for electric heavy-duty vehicles and a 15 percent credit for hydrogen fuel cell vehicles. Energy Innovation modeling suggests the 30 percent credit could result in a 16 percent sales share for heavy-duty trucks and a 27 percent share for light- and medium-duty freight trucks by 2030, reducing emissions by 7 million metric tons of CO2e. An 'Optimistic Deployment' scenario could increase heavy-duty electric sales to 23 percent and reductions to 11 MMT CO2e by 2030.
• Domestic manufacturing incentives in the BBB, such as the Loans for Advanced Technology Vehicle Manufacturing and Domestic Manufacturing Conversion Grants, aim to counter the U.S. lag in the global EV market. Between 2010 and 2020, China manufactured 44 percent of global EVs and Europe 25 percent, while the U.S. share fell from 20 percent in 2017 to 18 percent by 2020. Achieving 100 percent EV sales in the U.S. by 2035 could create at least 2 million jobs.
• The BBB and the Infrastructure Investment and Jobs Act (IIJA) provide complementary charging infrastructure. The IIJA focuses on highway corridors for long-distance travel via the National Electric Vehicle Formula Program and Grants for Charging and Fueling Infrastructure. The BBB targets community-based charging for routine use, including the Zero-Emission Vehicle Infrastructure Grants for rural or underserved areas and the Affordable Housing Access Program.

APA

Energy Innovation (2021). ELECTRIC VEHICLE INCENTIVES IN THE BUILD BACK BETTER ACT. https://energyinnovation.org/wp-content/uploads/Electric-Vehicle-Incentives-in-the-Build-Back-Better-Act.pdf

Chicago

Energy Innovation. ELECTRIC VEHICLE INCENTIVES IN THE BUILD BACK BETTER ACT. 2021. https://energyinnovation.org/wp-content/uploads/Electric-Vehicle-Incentives-in-the-Build-Back-Better-Act.pdf.

Wikipedia

{{cite report |author=Energy Innovation |title=ELECTRIC VEHICLE INCENTIVES IN THE BUILD BACK BETTER ACT |date=November 2021 |url=https://energyinnovation.org/wp-content/uploads/Electric-Vehicle-Incentives-in-the-Build-Back-Better-Act.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{energyinnovation2021electric, author = {{Energy Innovation}}, title = {{ELECTRIC VEHICLE INCENTIVES IN THE BUILD BACK BETTER ACT}}, institution = {Energy Innovation}, year = {2021}, month = nov, url = {https://energyinnovation.org/wp-content/uploads/Electric-Vehicle-Incentives-in-the-Build-Back-Better-Act.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }