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What does the Inflation Reduction Act mean for the automotive industry and electric vehicles?

The Biden Administration says the bill will make it easier for Americans to purchase electric cars. Dealers say they're not so sure.

YORK COUNTY, Pa. — President Biden celebrated a win for his administration on Tuesday, signing the Inflation Reduction Act into law.

The White House says the sweeping bill will not only reduce the deficit but will also tackle climate change by creating incentives for "green" purchases like electric vehicles.

Meanwhile, the legislation is fueling uncertainty in the automotive industry.

“It’s kind of a perfect storm in terms of the chaos it’s creating in the car industry," said Wayne Staib, sales manager at Lehman Volvo Cars of York.

Dealers say there’s unprecedented demand for the vehicles and lots of supply chain issues, leading to months-long waiting lists.

“They’re real vehicles that people want, but the tax credit is obviously scaring everybody," said Jesse Lutz, sales manager at Hanover Volkswagen.

With the passage of the Inflation Reduction Act, many electric vehicles may no longer qualify for a $7,500 tax credit.

That’s because they, and the batteries they run on, aren’t made in North America, which is one of the stipulations in the bill.

“People have placed orders for these cars anywhere from a year ago to last month and $7,500 has been in the back of their head the whole time, whether they’re looking at financing $40,000 or $60,000 with these vehicles," explained Lutz.

The quick movement of the legislation has both customers and dealers looking for answers.

“For manufacturers, it takes time to retool factories and be able to adjust manufacturing of certain models so there will definitely be a huge impact over the next couple of years," said Staib.

And while the federal government says the tax credits will make it easier and more affordable for the average American to buy these higher-priced cars, dealers worry the opposite may happen, at least in the short term.

“It’s really going to make it hard for everybody who already has plans, who has set plans to purchase one of these vehicles," said Lutz. "A lot of these people have already paid to have charging stations installed into their house, they brought in electricians, and now for this to change so greatly, it’s pretty significant.”

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