Only 11 vehicles do qualify for the full credit, and nine are eligible for a partial credit.
On Monday, the US Treasury announced how the new battery sourcing requirements would affect electric vehicle manufacturers, releasing the list of vehicles eligible for the full $7,500 tax credit, as well as the list of those eligible for the partial $3,750 credit and the vehicles that no longer qualify. As reported by Automotive News, 11 EVs get the full credit, nine get the partial credit, and six previously eligible models no longer qualify.
After several vehicles gained credit eligibility in February, the Treasury's new guidance makes many of them ineligible again, but according to John Bozzella, the CEO of the Alliance for Automotive Innovation, this is as good as things can be.
"March 2023 was as good as it gets," he wrote in a blog post. "Given the constraints of the legislation, Treasury's done as well as it could to produce rules that meet the statute and reflect the current market."
The new sourcing requirements came into effect on Tuesday, April 18. $3,750 will be available to EVs that have 40% of the battery's critical minerals extracted or processed in the US or in a country with which America has a free-trade agreement or if the battery is made up of materials recycled in North America. The other half of the credit becomes accessible if at least 50% of the value of the EV's battery components are produced or assembled in North America.
As with the original Inflation Reduction Act passed in August last year, these figures will ramp up in the coming years. By 2027, the percentage for minerals must be 80%, and in 2029, 100% of battery components must be made or assembled in North America. Price and household income restrictions continue to apply.
The idea is to reduce America's reliance on countries like China while simultaneously lowering carbon emissions, a big goal of the Biden administration as evidenced by new emissions proposals revealed earlier this month.
There are several winners and losers, but General Motors is in the best position, with all of its EVs qualifying for the full $7,500 rebate. Keep in mind, however, that the list will change as battery sourcing requirement stringency ramps up, which will mean that some cars currently ineligible may eventually qualify, and vice versa.
The vehicles that are no longer eligible for any credits are:
According to Reuters, Volkswagen is "fairly optimistic" that the ID.4 will qualify for the credits again, saying that it is "awaiting the proper documentation from a supplier to determine its eligibility for the credit."
UPDATE (4/20): Volkswagen has now confirmed that all variants of the ID.4 are eligible for the full credit.
The Nissan Leaf is also expected to qualify for at least a partial credit in the future.
Vehicles that qualify for the $3,750 credit are as follows:
UPDATE (4/21): Rivian has announced that vehicles falling below the $80,000 base MSRP do qualify for the partial credit.
As shown below, the Performance variant of the Tesla Model 3 still qualifies for the full credit, as do three versions of the Model Y.
Vehicles that qualify for the full $7,500 credit:
As we touched on earlier, the sourcing requirements will not remain static, and starting in 2024, an electric vehicle containing any battery components manufactured by a "foreign entity of concern" will become ineligible for credits. The same applies from 2025 for critical battery minerals. This restriction may include companies controlled by China, but Treasury is yet to reveal how strictly it will enforce this provision. We expect this will take a while to work out, and much more discourse on the matter will be required, particularly if companies like Volvo (owned by China's Geely) wish to become eligible.
Basically, you'll need to brush up on Inflation Reduction Act requirements every couple of months until domestic EV production becomes the norm.
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