The US Treasury Department has recently announced that many electric vehicles have lost their tax credit eligibility of up to $7500 after the new battery procurement regulations take effect.
The US Treasury Department released new guidelines in December 2023, detailing new battery procurement requirements and narrowing the available procurement range of electric vehicle battery raw materials. The purpose of this new policy is very clear: to exclude Chinese battery supply chain products from the subsidy scope. This measure came into effect on Monday, January 1, 2024.
After the new regulations take effect, the number of electric vehicle models eligible for US electric vehicle tax credits has decreased from 43 to 19, including different versions of the same model. The affected car companies include Nissan, Tesla, General Motors, etc.
The above-mentioned tax credit refers to the US government's release of the Inflation Reduction Act in August 2022, which provides a maximum tax credit of $7500 for some new electric vehicles.
The credit comes from two parts. One part ($3750) requires electric vehicles to extract, process, or recycle 40% of key battery minerals in North America or countries that have signed free trade agreements with the United States. This proportion should reach 80% by 2027; If you want to receive another portion of the credit ($3750), electric vehicles need to meet more than 50% of the battery components and materials manufactured or assembled in North America, and this proportion will reach 100% by 2029.
What is the stance of car companies?
The new regulations allow buyers to apply for a maximum tax credit of $7500 from participating distributors at the point of sale. However, models such as the Volkswagen ID.4, Tesla Model 3 rear wheel drive, Tesla Cybertruck all wheel drive, Nissan Leaf, Chevrolet Blazer EV, Cadillac Lyriq, and Ford E-Transit are not on the tax credit list.
Tesla did not immediately comment on Monday, but stated on its website, "Cybertruck may be eligible for federal tax credits in late 2024."
Volkswagen said on Monday, "We are confirming whether we are eligible for federal electric vehicle tax credits... We are optimistic that under the new regulations, MY2023 ID.4s and all MY2024 ID.4s will meet the criteria."
Nissan stated that it is working with suppliers to meet constantly changing requirements and hopes to regain the tax credit status of Nissan Leaf in the future.
Ford announced last month that its E-Transit will lose $3750 in tax credits.
In addition, General Motors has pointed out that all of its electric vehicles, except for the Chevrolet Bolt, will temporarily lose eligibility. Due to two secondary components, the Cadillac Lyriq and Chevrolet Blazer electric vehicle models will lose their eligibility for credit.
General Motors expects that Lyriq and Blazer electric vehicles will be eligible for subsidies again in early 2024 after changing procurement sources, and stated that other models produced after changing procurement sources will also be eligible for full subsidies.
The US Treasury Department stated, "Automakers are adjusting their supply chains to ensure that buyers continue to qualify for new clean car credits."