Time to clean up the fleet? Sec. 45W might help. (Inflation Reduction Act of 2022)

• Author: Godwin, Thomas,Mckinley, John
• Date: 01 December 2023

In September 2023, Tesla made waves when it cut the prices of its flagship models again to their lowest levels ever despite the lingering effects of inflation. Specifically, Tesla cut the price of its flagship sedan, the Model S, to a base price of $74,990, and its flagship SUV, the Model X, to a base price of $79,990. The company has reduced prices multiple times this year, leaving some consumers with buyer's remorse for overpaying and many Tesla lessees underwater.

The Model X now qualifies for clean vehicle tax credits under Sec. 30D, which was the focus of much of the media coverage following the price cuts. The falling prices in the electric car segment, paired with the promised electric commercial trucks already being produced by Freightliner, Lion Electric, Volvo, and other qualified manufacturers, should catch the attention of businesses looking to acquire new clean commercial fleets. The trucks, too, can come with significant tax savings.

Part of the Inflation Reduction Act of 2022, P.L. 117-169, Sec. 45W was enacted to provide a similar tax incentive to those of Secs. 30D and 25E to shift businesses' attention to clean vehicles for...