US Government Slashes Eligible EV List for $7,500 Tax Credit to 13 Models

Jan 02, 2024 03:10 AM EST

THE WHITE HOUSE WASHINGTON DC — (Photo : PIXABAY/12019)

Since January 1, the Biden administration's fresh rules cut the count of electric car models that get the $7,500 tax credit from 24 to 13. They use these tax perks to speed up using electric cars adoption and cut down on carbon emissions from transportation.

New List: Eligible EV List from 24 Down to 13

The updated standards significantly reduced the selection of qualifying models, dwindling from around two dozen to a mere 13, as per federal records obtained from fueleconomy.gov. Vehicles with Chinese battery as components are no longer eligible for the EV Tax Credit.

Treasury Department official Ashley Schapitl stressed the government-corporate partnership in implementing these new requirements. Automotive manufacturers are reorganizing their supply networks to maintain eligibility for the revolutionary clean vehicle credit.

She said this requires strategic collaborations and domestic job market revitalization.

Newly announced Treasury Department guidelines focus on battery components produced by entities under Chinese jurisdiction or having at least a 25% stake owned by the Chinese government.

Beginning in 2025, the regulations will extend to encompass suppliers of pivotal raw materials such as nickel and lithium for batteries. Yahoo News shared Bloomberg's report about this recent development.

The fresh stipulations were integrated into President Joe Biden's significant climate legislation, responding to Senator Joe Manchin's insistence. Manchin, a pivotal Democratic figure from West Virginia whose vote was crucial for the passage of the Inflation Reduction Act, expressed worry over U.S. taxpayers subsidizing batteries produced in China.

Which Cars Qualifies in the List

Here are some of the cars eligible for tax credit after government cuts list from 24 cars to 13.

Ford Motor Co.'s F-150 Lightning pickup truck
Stellantis NV's Jeep Wrangler 4xe
Model Y by Tesla Inc.,
Rivian Automotive Inc.'s R1T pickup truck

Instant Rebate for 2024

According to OBP's report, starting January, EV buyers can directly receive the clean vehicle tax credit upon purchase, eliminating the wait until the following tax season. Dealerships will facilitate this process by initially providing the credit amount to eligible buyers, effectively reducing the vehicle's cost.

The dealer then submits the necessary paperwork to the IRS, reimbursing the dealership for the tax credit amount, streamlining the credit process through the dealership.

Requirement for Tax Credit

Electric and plug-in hybrid vehicles qualify for the tax credit, provided they meet certain criteria. These requirements include battery size, vehicle weight, and two crucial conditions: being manufactured in North America and meeting price limits - specifically, a maximum sticker price of $55,000 for cars and $80,000 for SUVs and trucks.

Determining which cap applies to each vehicle model isn't always straightforward and can be confirmed on fueleconomy.gov. Additional features may raise the sticker price, and some vehicles are produced in multiple locations.

Dealers can confirm compliance with these criteria for specific cars. Moreover, certain well-known vehicles, including Tesla's more economical model and Ford's Mustang Mach-E, are now deemed ineligible for the $7,500 Tax Credit.

These changes resulted in a reduction in the number of Eligible EV models from 24 to 13. However, consumers can now access the EV Tax Credit immediately upon purchase, bypassing the previous system that required waiting for tax refunds.

How Companies are Coping

Bloomberg also stated that driven by legislation, automakers like General Motors and Hyundai are rushing to establish American battery factories and processing facilities for materials like lithium. However, achieving full independence from Chinese materials and components in building an electric vehicle remains a goal still years away.