The last April 18th, the IRS made public a brief list of electric vehicles that meet the strict new guidelines announced in March, enabling them to qualify for the complete $7,500 federal tax credit. Only six EVs met the criteria under the updated rules that pertain to EV batteries and exclude China as an authorized trading partner. Since the majority of electric vehicles use batteries made in China or by Chinese firms, we anticipated a reduction in the vehicle list.
To secure the complete tax credit, consider opting for the Cadillac Lyriq, Chevy Bolt, Chevy Bolt EUV, select versions of the Tesla Model 3 and Model Y, and the Ford F-150 Lightning. However, several EVs will no longer qualify for the full credit, such as the Nissan Leaf and Volkswagen ID.4. Hence, before finalizing your vehicle purchase, it’s crucial to review the complete list. After all, a $7,500 tax credit is a substantial amount of money that should not be overlooked.
Certain EVs are no longer eligible for the full tax credit
Although certain EVs are no longer eligible for the full tax credit, they may still be eligible for a half credit of $3,750, provided they meet specific criteria. Additionally, three PHEVs qualify for the half credit, while three others qualify for the full tax credit, including models from Ford, Lincoln, Chrysler, and Jeep. These credits aren’t designed to exclude hybrid technology but rather to ensure that the components are sourced appropriately.
Let me explain the breakdown of the tax credit system. To qualify for the first half of $3,750, the battery components of the EV must be at least 50% made or assembled in the USA. And, to receive the second $3,750, the company must source a minimum of 40% of critical minerals from the US or free trade partners. If a company meets either one of these standards, the vehicle will be eligible for a half credit.
Although the list currently consists of only six vehicles, it is expected to expand as automakers adapt to meet the regulations. As new EVs are manufactured with components that meet the sourcing standards, they will be added to the list, and previously excluded vehicles may be added back as manufacturers establish new factories in approved countries. Additionally, changes in trade agreements could impact the list of eligible vehicles as time progresses. However, the regulations are becoming increasingly stringent, with a requirement that batteries be entirely manufactured in North America by 2029 to continue receiving the full $7,500 tax credit.
