By Rachel Koning Beals
New restrictions favoring U.S. manufacturing mean that only certain EV makes and models qualify for the up to $7,500 tax credit. Others can earn partial credit.
The Biden administration, pushing for more U.S. manufacturing, has issued its updated list of all-electric and gas-electric hybrid vehicles that qualify for the full $7,500 tax credit, and those that can earn at least a partial sweetener for buyers.
With the update, at least 17 models are now eligible for a full or partial tax credit, based on new thresholds that require a certain percentage of the battery parts and the minerals used in those batteries to come from North America, meaning the U.S., or a country with select trade agreements with the U.S.
It's best to look at the complete list to see which versions of a particular model will qualify. See the full list.
The total is down from more than two dozen electric and plug-in models previously eligible for a U.S. tax break, which were first introduced about 10 years ago.
Qualified vehicles purchased before 2023 may be eligible for a similar tax credit of up to $7,500.
The government site also advises on tax incentives for used vehicles and leased vehicles.
For buyers to claim the full $7,500 tax credit, a percentage of the pre-determined battery parts must be made in North America and a percentage of critical minerals sourced in the U.S. or from certain trade-friendly countries. A partial $3,750 credit is available for meeting one of these two battery-sourcing requirements.
Not a single electric model from a foreign brand is eligible for the subsidy as revised. And EVs from startups, such as passenger- and commercial-truck maker Rivian Automotive Inc.(RIVN) and luxury brand Lucid Group Inc.(LCID), also missed making the list. That's largely because their vehicles are too expensive for the price contingencies that inform which autos qualify. Income levels of buyers are also a consideration.
Still, the new rules make for certain immediate winners over others.
Nearly all of GM's new EV models are eligible for the full $7,500 tax credit. Six Ford electric and plug-in hybrid models also qualify for a partial or full tax credit, including the Mustang Mach-E and F-150 Lightning.
Among Tesla's models, some entry-level Model 3 sedans will get a $3,750 credit. That is because the car uses battery cells made in China. Higher-end Model 3s and all its Model Y configurations qualify for the full $7,500 credit.
Tesla has been cutting its retail prices, a move to boost sales and bring some offerings in line with the tax breaks. And analysts say the maker likely isn't done cutting prices.
The tax credits made a big splash when they were included in 2022's Inflation Reduction Act, the broad spending bill that observers labeled the biggest pro-climate action by an administration to date. But Biden's pro-America stance soon came in conflict with the heart of the existing EV market, much of which is sourced abroad.
Read:Biden adds more EV charging across U.S., with pledges from Uber, Walmart, PG&E and others
The latest changes, which are intended to attract auto manufacturers into building domestically, apply to vehicles delivered to customers starting Tuesday. Several overseas makers, including Hyundai and Honda, have started to build battery plants in the U.S.
Other actions are intended to push EVs as well. The Environmental Protection Agency last week proposed its toughest restrictions ever on tailpipe emissions, a target that can likely only be met by turning out more EVs from assembly lines. The new standards aim for two-thirds of U.S. car sales to be electric by 2032.
-Rachel Koning Beals
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April 22, 2023 15:32 ET (19:32 GMT)
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