Major tax credits for purchasing electric vehicles have expired, and many of the vehicles they were used to purchase could suffer as a result.
The U.S. Treasury issued new guidelines last month that detailed requirements for where batteries that go into EVs could be sourced from. The goal was to wean out the reliance on American electric vehicles from China.
As a result, the number of models of EVs that qualified for tax credits in the U.S. dropped from 43 all the way to 19. Included among those vehicles now no longer eligible for the tax credit are some Tesla Model 3s, Chevrolet Blazer EV, Tesla Cybertruck All-Wheel Drive and Nissan Leaf.
The U.S. Treasury did say this week that changes to that list might happen soon, as some of the EV manufacturers haven’t submitted information on which of their vehicles might be eligible.
While Tesla didn’t immediately comment to media outlets this week, they did post a message on their website that read:
“Cybertruck is likely to qualify for the federal tax credit later in 2024.”
Buyers are still able to take advantage of the tax credit worth as much as $7,500 at a dealership that participates in the program. The tax credit is given right when the sale is completed.
There are some limits in place on things such as the income of the buyer and the price of the vehicle itself.
Some other vehicles that no longer qualify as of now include the Ford E-Transit, the Cadillac Lyriq, the Audi Q5 PHEV 55, the BMW X5 xDrive50e, the Tesla Model 3 Rear Wheel Drive and the Volkswagen ID.4.
On Monday, Volkswagen said it “is in the process of confirming eligibility for a federal EV tax credit for vehicles. … We are optimistic that MY2023 ID.4s and all MY2024 ID.4s will be eligible under the new rules.”
For its part, Nissan said it was working with its supplies so they could meet the requirements that have changed “and regain tax credit eligibility for the Nissan Leaf in the future.”
The program is apparently working, according to the U.S. Treasury, which said recently:
“Automakers are adjusting their supply chains to ensure buyers continue to be eligible for the new clean vehicle credit, partnering with allies and bringing jobs and investment back to the United States.”
The federal tax credit is obviously a huge draw to buyers who are interested in EVs. Electric vehicles may be attractive to a lot of people, but one of the biggest hurdles for people to make a purchase decision on them is that they are much more expensive than typical gas-powered vehicles.
So, even though savings are expected over the long term since they don’t require gas, buyers still have to be in a position to shell out the hefty upfront price tag.
Without the tax credit in place, it’s possible that EV manufacturers could suffer a big drop in sales, at a time when the Biden administration is pushing hard for the U.S. to reach zero-emission status.