The Inflation Reduction Act, the most important climate protection law, was signed today and changes the availability of tax credits for electric vehicles. Now only EVs assembled in North America qualify for the credits. Today, the U.S. government released a tentative list of which vehicles are currently eligible for the $7,500 EV tax credit.
The new climate law contains a number of provisions that will affect the availability of EV credits and these provisions will be phased in over the coming months and years. Most of them are focused on bringing more EV and battery production to the US.
But the phase-in times of various regulations have created a lot of confusion in the EV community about which vehicles will qualify and when.
The Department of Energy’s Alternative Fuels Data Center has published the list of final assembly vehicles in North America and we have copied the list below.
Where possible we have included links to enable you to search local dealer inventory for the car you are looking for. We’ve also added our own notes in the Notes column to clarify which models qualify.
The list includes vehicles that are assembled in North America but for which the manufacturers have currently exceeded the 200,000 previous credit cap. This cap will therefore be lifted on January 1, 2023 Cars marked as “Manufacturer Sales Cap Reached” only qualify for the EV Tax Credit next year.
Note that this list is not set in stone and will change as other provisions of the new EV tax credit are phased in or as manufacturers change their production schedules (e.g. if VW moves ID.4 production to Tennessee in 2023). We cannot guarantee that any particular customer will be able to access the credit and provide the best information possible.
Additionally, production of some models is subject to change mid-year or based on certain trim levels, so be sure your custom vehicle was assembled at a North American facility. The AFDC recommends that you use the NHTSA VIN decoder on your VIN to confirm it was assembled in North America. For the country name of the final assembly plant, see “Plant Information” at the bottom of the page.
Additionally, the IRS posted a page explaining Section 30D of the Internal Revenue Code, the section containing the EV tax credit. This includes a description of what is a “written binding contract” that allowed electric vehicle buyers to take the “old” credit if they signed a purchase agreement prior to the day the IRA was signed (today).
Other requirements that have not yet been phased in include guidelines for the procurement of battery materials and critical minerals being developed by the IRS. The IRS has to issue those guidelines by the end of this year, but from the language on the site feels like the tax office probably they won’t be exhibiting until December 31st (or maybe that’s just wishful thinking on our part).
Some vehicles will not qualify for the EV tax credit once the IRS issues its guidance because they are above the $55,000 MSRP cap for cars and the $80,000 MSRP cap for trucks. It will also introduce income caps, meaning those earning more than $150,000 ($225,000 head of household, $300,000 joint filing) will not qualify.
There’s also a provision that allows buyers to take advantage of the EV tax credit up front at the point of sale, but from our reading of the bill, that doesn’t appear to come into effect until 2024.
The information in this article supersedes our older article that contained information about the “old” tax credit.
The confusion surrounding these new EV tax credits is unfortunate, and we wish their implementation was a little simpler and less sudden. But given the difficult political situation at the time the bill was passed, no one wanted to touch the text of the bill after the Senate reached a compromise. Unfortunately, with half the Senate unwilling to support this important piece of legislation, we got what we got.
It is our hope that the IRS will make the new EV tax credits easier to implement by rolling everything out at once and will respond to public comments, which we will update you on as they become available.
The number of plug-in hybrids on the list is a bit unfortunate – it feels like hybrids should get a smaller share of the credits than full EVs. But given the limited battery supply, PHEVs manage to electrify more vehicles per kWh than BEVs. So as long as people plug in their PHEVs and not just use the engine, they’re still a useful thing in terms of decarbonization.
Also, PHEV sales have been low for years and are not increasing, while BEVs are. All-electric is just a more comfortable experience, so we still expect that to result in fewer combustion engines on the road.
Overall, despite these difficulties, the legislation’s objectives will help address the challenges currently faced by electric vehicles (mainly supply challenges), will encourage more environmentally and socially responsible sourcing of materials, and should apply to far more individual cars on the road than the previous legislation due to the removal of the manufacturer cap and the extension for another decade.
While we’ll have some growing pains with the structure of the new EV tax credit in the months and years to come, the bill includes some much-needed changes to the tax credit that should help the industry as a whole, along with many other climate spending and mitigation measures emissions and to improve America’s position in the green energy economy of the future, so overall we’re happy with the law.
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