Federal EV tax credits are facing many changes this year. According to NPR, the tax credit will be easier for consumers to access this year, with EV purchasers able to take the credit as a rebate when purchasing the vehicle. However, fewer vehicles are going to be eligible for the full $7,500 credit.
On Monday, January 1, new guidelines for electric vehicle (EV) U.S. tax credits went into effect, causing many EVs to lose eligibility, reported Reuters. The U.S. Treasury had issued the guidelines in December, detailing new battery sourcing requirements aimed at weaning the U.S. electric vehicle supply chain away from China.
The $7,500 credit consists of two credits, each worth $3,750. Vehicles can qualify for both, one or neither.
One of the credits focuses on the raw materials inside batteries, which means that a certain percentage of minerals needs to be mined or processed in the United States or a trade partner to be eligible. The other credit focuses on battery manufacturing: a certain percentage of the battery must be manufactured or assembled in North America.
Many automakers and EV models were affected by the new guidelines, including the Nissan Leaf, Tesla Cybertruck All-Wheel Drive and Chevrolet Blazer EV losing eligibility, according to Reuters.
The number of EV models qualifying for U.S. EV tax credits fell from 43 to 19, which includes different versions of the same vehicle type. The Treasury said some manufacturers have yet to submit information on eligible vehicles, which could lead to changes in the list.
The Treasury said, "automakers are adjusting their supply chains to ensure buyers continue to be eligible for the new clean vehicle credit, partnering with allies and bringing jobs and investment back to the United States.”
Ford Motor said its E-Transit would lose the $3,750 tax credit, as would the Mach-E and Lincoln Aviator Grand Touring plug-in hybrid, but its F-150 EV Lighting and the Lincoln Corsair Grand Touring retained credits, reported Reuters.
General Motors (GM) noted all of its EVs would temporarily lose eligibility except the Chevrolet Bolt, adding that the Lyriq and Blazer EV are losing the credit because of two minor components.
Tesla disclosed in December its Model 3 Rear-Wheel Drive and Long Range vehicles would lose federal tax credits starting Jan. 1. The Model 3 Performance retains the $7,500 credit.
Continue reading: In April 2023, NACS Daily reported on changes occurring in the EV industry, noting that receiving a full tax credit for an EV purchase would become increasingly difficult.