The federal EV tax credit is about to change in a particular way that will make it much more attractive to buyers. Starting January 1, the rebate will be available: up to $7,500 for qualifying new EVs and up to $4,000 for qualifying used EVs. when you buy the caras opposed to something you have to claim when filing your taxes.
Even better, more than 7,000 car dealers They've already signed up to make sure they can offer that rebate at the point of sale, representing nearly half of all new car dealers in the country.
But there's a problem: There may not be many cars that qualify for the full $7,500 credit come the new year, thanks to new restrictions that will go into effect regarding the components that make up these zero-emission vehicles.
This is a result of the way these credits were reinvented as part of President Biden's Inflation Reduction Act. The process involved a lot of haggling, especially with U.S. Senator Joe Manchin, over the ultimate purpose of the credits. Should they be a lubricant for sales of zero-emission vehicles that help combat climate change, or a tool to incentivize the development of the electric vehicle supply chain in North America?
The answer ended up somewhere murky in the middle, as it usually does. The credit was effectively divided in two. Vehicles qualify for a $3,500 credit if automakers follow certain guidelines for where they source battery materials, and another $3,500 as long as they follow similar rules for battery components. (Beyond that, vehicles must be made in North America to qualify for anything.) Starting in 2024, those sourcing requirements become more stringent.
As a result, General Motors said Just this week Your Chevy Bolt will qualify for the full tax credit starting January 1. The more expensive Cadillac Lyriq and the new Chevy Blazer do not. GM, the country's largest automaker, said it has to accelerate plans to replace two minor components for the Blazer and Lyriq to comply with the new restrictions.
Meanwhile, Ford said only its F-150 Lightning will qualify for the full $7,500 credit. The Lincoln Corsair Grand Touring SUV will be eligible for half the credit, while the Mustang Mach-E, Lincoln Aviator Grand Touring plug-in hybrid and E-Transit pickup truck will not.
Even Tesla, a company that is remarkably proficient at identifying and qualifying for clean energy credits and subsidies, initially said its Long Range and RWD Model 3 variants would lose half the credit, and then days later shared that, in reality, those will lose the full credit. Tesla has also indicated that the Model Y could not be eligible either.
As we head into the new year, more automakers are likely to share which of their electric vehicles qualify (or more likely don't) for the credit, and the Treasury Department will ultimately compile a list on its website.
All of this uncertainty speaks to the level of complexity involved in building an electric vehicle in a world where the supply chain still largely resides in and around China. But it also underlines the somewhat confusing motivation of the guidelines.
