In recent weeks, the IRS has added a few more models, including the Volkswagen ID.4 and Nissan Leaf, to its list of North American-built electric vehicles qualifying for the EV tax credit in calendar year 2024.
As expected, the list remains very short.
Noteworthy Tesla omissions include most of the Model 3 lineup (the Performance version is the only one that now qualifies), as well as the entire Model S lineup. The Ford Mustang Mach-E is completely disqualified for now.
Also of note: No Rivian electric truck or SUV qualifies for the full $7,500 tax credit amount in 2024, at this time. The credit amount on these models has fallen to $3,750.
2024 Chevrolet Blazer EV RS
Tougher rules on EV battery origin = fewer qualified
In most of these examples, that’s because the tax credit, as revamped under the Inflation Recovery Act of 2022, phases in tougher rules for the origin of battery components and critical minerals.
As of 2024, in addition to North American assembly, 60% of battery parts will need to be North American–sourced in order to qualify for half of the credit amount ($3,750). That’s up from a 50% requirement for 2023.
The other $3,750 leans on a stipulation that at least 50% of critical mineral content in batteries be North American–sourced (or from countries in which there’s a free-trade agreement in place).
2023 Ford Mustang Mach-E
Applying a China filter
While automakers had known about those 2024 rules for the previous 16 months or more, there’s one other dealbreaker that was just laid out jarringly close to the start of the year. Starting Jan. 1, 2024, as detailed by the Department of Energy on Dec. 1, 2023, any vehicles with key battery components sourced from a “foreign entity of concern”—China, Russia, Iran, or North Korea—are disqualified in 2024, as will corporate subsidies if a “parent entity” from one of those countries directly holds more than 50% of the automaker’s interest.
In 2025, the tax credit rules will be extended to mining, processing, and recycling of critical minerals. It’s all part of a comprehensive push from the Biden administration to foster a domestic supply chain for EVs.
For automakers and suppliers, there may also be other logistical hurdles for motors, inverters, and other propulsion components accompanying these battery-level changes.
2023 BMW i7 xDrive60
EV leasing loophole continues
None of this applies to the leasing of electric vehicles, as an EV leasing loophole continues on, applying the full $7,500 of federal money to commercial vehicles regardless of their origin, domestic content, or price—which effectively means, in many cases, that the federal government is subsidizing imported luxury EVs.
The credit becomes a dealership rebate
As the EPA emphasizes in its list, buyers will need to check the vehicle identification number (VIN) to assure that a particular EV on the sales lot is qualified for the credit. For now, that’s being done in a proprietary way for each automaker—GM, for instance, has deployed a VIN-check tool for its dealerships—but that’s another thing that may become centralized in the near future.
Also of note: The EV tax credit becomes an instant dealership rebate in 2024, giving EV buyers instant access to the credit and allowing them to finance a lower amount up front for the vehicle. It rests on a declaration from the buyer that they qualify, and dealerships need to register with the IRS. With less than half of franchised dealerships registered for the tax credit by the end of the year, even that aspect will be messy.
Since the start of 2023, income and price caps have been in effect. In order to claim the credit on an EV purchase, buyers need to slot under an adjusted gross income limitation of $300,000 for married couples filing jointly, $225,000 for head of household, or $150,000 for other filers. Vehicle price caps also apply: $55,000 for new cars and $80,000 for pickup trucks, SUVs, and vans.
2024 Rivian R1T
Which models qualify?
Here’s the list of models that qualify for the full $7,500 unless indicated for 2024:
2023-2024 Audi Q5 plug-in hybrid ($3,750)
2024 Cadillac Lyriq
2022-2023 Chevrolet Bolt EV
2022-2023 Chevrolet Bolt EUV
2024 Chevrolet Blazer EV (GM-confirmed but not yet IRS-listed)
2022-2024 Chrysler Pacifica EV
2022-2024 Ford Escape Plug-In Hybrid ($3,750)
2022-2024 Ford F-150 Lightning (Extended Range and Standard Range)
2024 Honda Prologue
2022-2024 Jeep Grand Cherokee 4xe ($3,750)
2022-2024 Jeep Wrangler 4xe ($3,750)
2022-2024 Lincoln Corsair Grand Touring ($3,750)
2024 Nissan Leaf ($3,750)
2023-2024 Rivian R1T (Dual-Motor; Large, Standard, Standard+ Pack) ($3,750)
2023-2024 Rivian R1S (Dual-Motor; Large, Standard, Standard+ Pack) ($3,750)
2023-2024 Tesla Model 3 Performance
2023-2024 Tesla Model X Long Range
2023-2024 Tesla Model Y (Performance and AWD)
2024 Tesla Model Y (Rear-Wheel Drive)
2023-2024 Volkswagen ID.4
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UPDATED March 12 from a piece originally posted January 2.
Credit : Source Post
