The United States government will begin rolling out new incentives starting January 1, 2023 for delivery companies to swap out their ICE-powered vans for all-electric alternatives. Per Reuters, these incentives are part of the Inflation Reduction Act (IRA) and will offer companies such as FedEx and Amazon, tax credits of $7,500 or $40,000 depending on the size of the EV delivery van. FedEx and Amazon, for example, are set to qualify for the $7,500 tax credit level for their upcoming EV delivery vans.

As an added benefit for companies, these federal credits can be combined with similar state-level programs. California, New York, and a few other states are prepared to spend billions to convince these major corporations to switch to zero-emissions vehicles over the next several years.

Unlike the tax credits the IRA offers to consumers to buy passenger car EVs, such as the Ford F-150 Lightning, these corporate-level ones lack the "made in the USA" rules. That major exception for commercial vehicles is extremely attractive for corporations as it enables them greater flexibility to make the ICE to EV transition. The US transportation sector is significant in size, consisting not only of big and small commercial trucks but also buses and airplanes.

Combined, this sector accounts for over one-third of greenhouse gases produced in the US. The new tax incentives, like those for passenger vehicles, are aimed to help lower the EV price tags so that they're more in line with conventional gas-powered vehicles.

The US Postal Service, as we recently reported, also has a plan to gradually phase out its old fleet of mail delivery trucks for EV replacements.

Corporations are already responding very positively to the Biden administration's new EV policies. Amazon, for example, believes the IRA has the ability to "transform our collective approach to reducing carbon emissions across sectors." The company struck a major deal with EV automaker Rivian back in 2019 to build and deliver 100,000 electric vans by 2030. Many of these vans are already making deliveries.

However, some in the van and delivery business are claiming the IRA's incentives don't go far enough because they don't completely close the cost gap between EV and ICE vehicles. Early adapters, such as Amazon, can afford that price difference but many other smaller companies may conclude it still does not make financial sense to make the change.