Nissan CEO Wants More Time To Meet Inflation Reduction Act's Demands

Dec. 03, 2022 2:56 PM ET by Karl Furlong Electric Vehicles / 5 Comments

As things stand now, models like the Ariya stand to lose out to locally-assembled rivals.

Like some other automakers, Nissan wants a longer grace period to meet the stipulations of the Inflation Reduction Act, which prevents many electric vehicles from qualifying for local incentives unless they meet the Act's strict demands. Primarily, the IRA requires automakers to manufacture EVs in North America to reduce their reliance on China.

With the new Nissan Ariya electric crossover only recently hitting showrooms, it's little surprise that the Japanese marque wants the Biden administration to delay the IRA's implementation, as it means that this otherwise excellent vehicle could lose out to rivals. The Affordable Electric Vehicles for America Act could solve Nissan's dilemma, but only if it passes.

"The IRA in the short term is challenging," said Nissan CEO Makoto Uchida in a new interview with Bloomberg in New York. "Those regulations probably should have had some grace period."

As things stand now, if automakers don't manufacture their EVs in North America from January, those vehicles won't qualify for the tax credit worth up to $7,500. For a car like the Ariya that starts at under $45,000 in a price-sensitive segment, that has significant implications. It could see customers rushing over to Ford for the Mustang Mach-E instead, a compact crossover that does technically qualify.

Nissan already has a local manufacturing plant in Mississippi where models like the Altima and Frontier are built, but the Ariya is only assembled in Japan and China. Four of the brand's planned six EVs that are scheduled to arrive by 2030 will eventually be assembled in Mississippi.

While Uchida is not opposed to the IRA, it's all a matter of timing. "We cannot build a plant in one day," he said, believing that a "kind of grace period or adoption period" should be considered.

Back in September, Nissan was already looking through the 725-page IRA document in an attempt to find a loophole which would buy it some time. Almost three months have passed, and it appears that Nissan isn't closer to a solution, other than to accelerate its plans to manufacture more EVs in the USA.

While the IRA is good news for America with local factory construction kicking into high gear over the last few months, Japan says that the Act could be illegal. Worse still, the average consumer will potentially be put in the uncomfortable position of either spending more on an EV they actually want or going with a less desired option to qualify for the tax credits.

Nissan may have no choice but to follow rivals like Hyundai by investing in the construction of more EV and battery manufacturing facilities - and sooner rather than later.