HERE ARE ALL THE CARS AND TRUCKS GETTING KICKED OFF EV TAX CREDITS

The Biden Administration's Inflation Reduction Act (IRA) added a huge number of American-made electric vehicles eligible for a $7500 tax credit, including models for which the credit previously expired. But, the IRA giveth, and the IRA taketh away. The tax credit used to apply to EVs—including plug-in hybrids—made in the U.S. costing under $55,000 for cars and $80,000 for SUV. Starting tomorrow, an EV must also have a certain percentage of U.S.-sourced battery material to qualify for the full credit. Consequently, the list has gotten much, much shorter.

Notably, the entry-level versions of the Rivian R1T and R1S no longer qualify for any sort of credit. The list also no longer includes any EVs or PHEVs from foreign automakers. Previously, the Audi Q5 plug-in, BMW 3-Series and X5 plug-ins, Genesis Electrified GV70, Nissan Leaf, Volkswagen ID.4, and Volvo S60 plug-in all qualified for some sort of tax credit, as all were built in the U.S. Now, those are all struck from the list, at least until those automakers up the amount of U.S.-sourced content in the battery.

Not that American automakers have it peachy. The Ford E-Transit and Mustang Mach-E's previous $7500 credits have been halved to $3750, and the same is true for Jeep's plug-in hybrid Wrangler and Grand Cherokee 4XE models. The base Tesla Model 3's credit has been halved as well, though all other versions of the Model 3 and all Model Y variants qualify for a $7500 credit. GM got off comparatively easy, as all its sub $80,000 EVs—Chevrolet Bolt, Blazer, Equinox EV, Silverado EV, and Cadillac Lyriq—still qualify for the full $7500.

The idea here is both to promote American manufacturing and reduce our reliance on other countries, mostly China, for battery materials. Right now, as Reuters reports, the IRA stipulates 50 percent of the value in battery materials must be made in North America, while 40 percent of the mineral components must come from the U.S. or a free-trade partner. Meet one or the other, and the vehicle qualifies for $3750; meet both, and you get the full $7500. Per CNN, these requirements will increase year over year to 80-percent battery-material value by 2027 and 90-percent mineral content by 2028, forcing automakers to dramatically alter their supply chains.

All of this makes leasing a more appealing option. There are far fewer hoops for an EV to jump through to qualify for a $7500 credit. Per the New York Times, the tax credit is given to the leasing company even if the car doesn't meet sourcing requirements, and that company can then chose to extend that discount to a customer. Hyundai—which multiple in-demand EVs outside of the U.S.—is therefore pushing leasing harder than sales.

Tax incentives for used EVs stay largely the same, and many non-U.S.-made cars qualify for a $4000 rebate, but only if the sale price is less than $25,000. This is also nonrefundable, meaning if you owe less than $4000 in federal taxes, you don't get the full credit.

These new rules are sure to cause confusion and anguish among potential EV customers and many automakers. There are more changes coming too. While currently the EV tax credit goes to the buyer, next year, it transfers to car dealers, which can then take the qualifying amount off the selling price of a car. This also comes just a week after the EPA announced a proposal to dramatically reduce tailpipe emissions by mandating increasingly strict fleet-average emissions regulations on automakers. The thinking is that the only way automakers can hit these targets is by selling a certain number of EVs, and the EPA projects that if enacted as proposed, 67 percent of new U.S. auto sales will be EV by 2032.

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2023-04-17T18:44:58Z dg43tfdfdgfd