Stricter manufacturing standards for the electric-vehicle tax credit mean several carmakers are no longer eligible for the $7,500 tax break.
The Inflation Reduction Act of 2022 divided the EV tax credit into two parts: For any vehicle bought on or after April 18, 2023, to qualify for $3,750 of it, at least half of the value of battery components must be produced or assembled in North America.
To claim the other half, 40% of the value of critical minerals — like graphite, lithium and cobalt — must be sourced from the US or a free-trade partner.
Less than a dozen EV models still qualify for the full incentive, according to the Treasury Department.
Read more: How to Claim the $7,500 EV Tax Credit
Which cars no longer qualify for the EV tax credit?
The Treasury Department has said the list of approved cars will likely grow as some manufacturers have yet to submit updated documentation. As of April 24, these EVs that previously qualified for the credit no longer do:
- Audi Q5 TFSI e Quattro PHEV
- BMW 330e sedan
- BMW X5 xDrive45e SUV
- Genesis GV70 Electrified SUV
- Nissan Leaf
- Volvo S60 PHEV, Extended Range and T8 Recharge
Which EVs still qualify for the full credit?
The Ford F-150 Lightning, built in Dearborn, Michigan, qualifies for the full credit.
These vehicles qualify for the full $7,500 credit:
Since the agency released its initial list of approved models on April 17, 2023, all versions of Volkswagen’s 2023 ID 4 have been made eligible for the full $7,500 credit. That makes VW the only foreign automaker to currently have a battery-electric vehicle eligible for the full $7,500.
“This shows that we made the right decision to localize production of the ID.4 in Tennessee and invest even further in battery production, components and innovation,” VW Group of America CEO Pablo Di Si said in a statement.
Which EVs are now only eligible for half of the credit?
Not all Teslas qualify for the full credit, though the Model 3 Performance does.
The new battery and mineral standards also trimmed how much of the tax break many EV owners can claim. Models from Ford and Stellantis that previously qualified for the full credit are now only eligible for $3,750.
The standard Tesla Model 3 is also only eligible for half, though the Performance model is still eligible for the full $7,500.
These vehicles are eligible for the $3,750 credit:
- 2022-23 Jeep Wrangler 4xe plug-in hybrid
- 2022-23 Jeep Grand Cherokee 4xe plug-in hybrid
- 2022-23 Ford E-Transit
- 2022-23 Ford Mustang Mach-E (standard and extended range battery)
- 2022-23 Ford Escape plug-in hybrid
- 2022-23 Lincoln Corsair Grand Touring
- 2022-23 Tesla Model 3 (standard range rear-wheel drive)
- 2022-23 Rivian R1S
- 2022-23 Rivian R1T
After EV-maker Rivian provided documentation to the IRS that its 2023 R1T and R1S meet the critical minerals requirement, certain configurations of both vehicles were made eligible for the $3,750 credit.
Why did the requirements for the EV tax credits change?
The new rules are intended to lower the cost of zero-emission vehicles for consumers while still benefiting US manufacturers, Secretary of the Treasury Janet Yellen said in March, while also “strengthening our energy and national security.”
Currently, more than half (56%) of battery components are sourced from China, with which relations have been increasingly strained.
Beginning in 2024, EVs that contain battery parts from “a foreign entity of concern” — a classification that includes China, Russia, Iran and North Korea — will be unable to claim any of the credit.
That standard will be applied to critical minerals in 2025.
Will foreign carmakers become eligible for the EV tax credit?
Automakers anticipated tighter restrictions and many are already investing in US manufacturing with an eye to getting approval. German automaker BMW, for example, is spending $1.7 billion on its South Carolina operations, earmarked for building EVs and batteries.
Hyundai is building a $5.5 billion EV manufacturing plant in Bryan County, Georgia, where it will also produce batteries. The Korean carmaker says at least 300,000 Hyundai, Genesis and Kia EVs will roll off the line annually starting in 2025.
Electric Vehicle Tax Credit: These EVs No Longer Qualify for the $7,500 Tax Break – CNET
Source: Media Star Philippines
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