On January 1, the United States will introduce incentives for delivery companies and other businesses to switch to electric trucks as part of a larger push to get polluting, workhorse vehicles off the roads and out of neighborhoods.

The ground-breaking incentives, established by President Joe Biden’s Inflation Reduction Act (IRA), will provide tax credits ranging from $7,500 to $40,000, depending on the size of the electric vehicle (EV). Many of the electric trucks used by delivery companies such as FedEx and Amazon.com would qualify at the $7,500 level.

These tax credits can be combined with voucher programs in California, New York, and other states, which are spending billions of dollars to persuade businesses to switch to zero-emission vehicles.

The IRA’s commercial EV credits do not have the same “made in the USA” requirements as passenger cars.

The transportation sector in the United States, which includes large and small trucks, buses, and airplanes, is responsible for more than one-third of the planet-warming greenhouse gases produced in the country.

In a year marked by yet more floods, hurricanes, and droughts linked to climate change, governments and businesses have been forced to examine financial risks and their exposure to liability more closely.

According to experts, incentives should help bring EV sticker prices closer to parity with traditional gas-powered vehicles.

This will “help level the playing field for electric vehicles,” according to Ben King, associate director at Rhodium Group.

This year, Jim Farley, CEO of electric van market leader Ford Motor Co (F.N), predicted that IRA tax credits would have a “dramatic impact on EV adoption.”

Experts believe that increased commercial EV purchases will lower manufacturing costs and vehicle sticker prices, attracting even more buyers.

And droughts linked to climate change, governments and businesses have been forced to examine financial risks and their exposure to liability more closely.

According to experts, incentives should help bring EV sticker prices closer to parity with traditional gas-powered vehicles.

This will “help level the playing field for electric vehicles,” according to Ben King, associate director at Rhodium Group.

“We’re at a tipping point,” said Jim Chen, vice president of public policy at Rivian (RIVN.O), which has Amazon-branded EVs rolling on streets in more than 100 U.S. cities. Amazon in an email told Reuters it expects the IRA to “transform our collective approach to reducing carbon emissions across sectors.”

“We’re already hearing from customers that they’re excited about this,” said Travis Katz, CEO of General Motors’ (GM.N) BrightDrop, which counts FedEx, Walmart (WMT.N) and DHL Express Canada as customers.

According to Paul Rosa, senior vice president of procurement and fleet planning at Penske Truck Leasing, EV incentives may prompt purchases by early adopters but are insufficient to entice customers to come off the sidelines in large numbers. This is because they do not close the sticker-price cost gap and can impose onerous rules, according to him.

“It still doesn’t get them over the goal line,” Rosa said.

(Adapted from USNews.com)

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