Rivian, Lucid Rush To Help Buyers With Existing EV Tax Credit Before It Expires – Automotive News | Vette Leader

Luxury electric vehicle startups Rivian Automotive and Lucid Motors are rushing to help reservation holders qualify for the current $7,500 federal tax credit before the recently passed Inflation Reduction Act replaces it with a more restrictive incentive , which includes price and income caps.

With President Joe Biden expected to sign the climate and tax bill this week, the EV startups are telling pre-order buyers that the new law could preclude their eligibility for EV credit if they don’t sign a binding purchase agreement in the coming days.

“Once the Inflation Reduction Act is signed, there will be new restrictions on the eligibility of US buyers,” Rivian said in a blog post. “Under these new restrictions, an electric pickup truck or SUV must be priced below $80,000 and the buyer must fall below certain income thresholds.”

Tesla, the leader in electric vehicles by sales, is no longer eligible for current credits for electric vehicles that began in 2010.

Before the new regulations take effect, Rivian said existing balances could be blocked. The automaker referenced the credit with its IRS tax code, IRC 30D. The current EV credits have no price limit for vehicles and no income cap for buyers.

“Purchasers who have a ‘written binding contract’ to purchase a qualifying EV before the Inflation Mitigation Act comes into effect can apply under the current IRC 30D tax requirements,” Rivian said. The EV startup provided a link for customers interested in signing a contract.

Lucid also said last week that it is “exploring opportunities to invite reservation holders to confirm their orders now to remain eligible for current incentives.” Some reservation holders have online their Lucid email invitations to sign a binding contract and secure the tax credit.

Reservations and pre-orders are similar terms for buyers who have paid a refundable deposit but have not yet committed to purchasing a vehicle because its production is not yet scheduled.

Rivian announced this month that it has a pre-order backlog of about 98,000, with this year’s production estimated at 25,000 vehicles. Lucid said it has about 37,000 reservations and will build between 6,000 and 7,000 vehicles this year.

Confusion continues among auto industry analysts as to when the current loans will expire.

Some believe they’ll be available on North American-made vehicles by the end of the year, based on the language in the new law. Others suggest they will end with Biden’s signature.

The new law contains a “transitional regulation”. It said that “prior to the effective date of this law,” a taxpayer who “purchased a new qualifying plug-in electric vehicle or entered into a written binding sales agreement” would be eligible for the current credit.

These outgoing incentives have given automakers a 200,000 quota for plug-in vehicles based on battery capacity. Full EV models have qualified for the full $7,500, while plug-in hybrid vehicles generally qualify for less.

Tesla and General Motors used up their 200,000 credits two years ago.

Unlike the new incentives, which take effect on January 1, the current ones apply to vehicles manufactured outside of North America and have no sourcing requirements for their battery materials or manufacturing.

The loss of the existing incentives – and the timing of their expiry – is significant because the new rules are so strict that most EVs don’t qualify immediately.

One automaker trade group, Autos Drive America, expects the current loan to last through the end of the year, “with the only new requirement being assembly in North America.”

Rivian’s factory is in Illinois and Lucid’s is in Arizona.

But the Zero Emission Transportation Association said Automotive News that the current EV credit is expected to go away once Biden signs the bill. Only binding purchase agreements before that date would qualify for the incentive, the group says.

Greater certainty is expected from the IRS as it changes EV tax rules.

Under the new law, Rivian vehicles will have a price cap of $80,000 for the R1T pickup and R1S SUV, and buyers will have income caps of $300,000 for joint taxpayers.

The amount of the new tax credit, up to $7,500, depends on where the battery minerals are sourced and where the battery and vehicle manufacturing takes place. The credit is split into two $3,750 parts, one focused on North American battery materials and the other on local manufacturing.

The base R1T and R1S come in under the $80,000 cap, but Rivian CEO RJ Scaringe said last week that the average price of recent configurations with options is around $93,000.

Scaringe suggested that future Rivian vehicles on the smaller R2 platform under development are more likely to qualify for credits due to price and greater local content.

“While we have considered and planned the long-term supply chain for R2, we have always looked at it through the lens to ensure we have a domestic supply chain in place to support the ramp-up of this product,” Scaringe said.

Lucid will miss the price cap on its current vehicle, the Air sedan, which starts at $89,050. Under the new law, sedans have a price cap of $55,000 to consider for EV credit.

Lucid’s next vehicle, the Gravity SUV, isn’t expected until 2024, and pricing hasn’t been released yet. Like Rivian, Lucid is developing a platform for more mainstream vehicles, but hasn’t given details.

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