The Law on reducing inflationmajor climate bill, was signed today, changing the availability of tax credits for electric vehicles. Currently, only electric vehicles assembled in North America can receive credits. Today, the US government released a preliminary list of vehicles currently eligible for the $7,500 electric car tax credit.
There are a number of provisions in the new climate bill that affect the availability of electric vehicle loans, and these provisions will be phased in over the coming months and years. Most of them are focused on increasing the production of electric vehicles and batteries in the United States.
But the timing of the phase-in of the various regulations has caused a lot of confusion in the EV community about which vehicles will be eligible and when.
The Center for Data on Alternative Fuels of the Ministry of Energy has published list of vehicles with final assembly in North America, and we’ve copied the list below.
We’ve added links where possible so you can search local dealers for the car you’re looking for. We’ve also added our own notes in the ‘note’ column to clarify which models are suitable.
The list does include cars that are assembled in North America, but for which manufacturers are currently exceeding the 200k pre-credit limit. Therefore, this restriction is lifted on January 1, 2023 Vehicles marked as having reached the manufacturer’s sales limit will not qualify for the EV tax credit until Next year.
Note that this list is not written in stone and will change as other provisions of the new EV tax credit are phased in or as manufacturers change their production plans. We cannot guarantee that any customer will be able to access credit and we provide the best information we can.
Additionally, some models may change production mid-year or depending on certain trim levels, so you should confirm that your vehicle was assembled in a North American factory. AFDC encourages you to use NHTSA VIN Decoder to your VIN to confirm that it was assembled in North America. The name of the country of manufacture of the final assembly can be found under “Factory Information” at the bottom of the page.
In addition, the IRS released explanation page section 30D of the Internal Revenue Code, which is the section containing the EV tax credit. This includes a description of what is a “written contract” that allows electric car buyers to take out an “old” loan when they sign a purchase contract. until the day the IRA is signed (today).
Other requirements that have yet to be phased in include battery materials and important mineral prospecting guidelines to be developed by the IRS. The IRS is supposed to release these guidelines by the end of this year, but judging by the language on the page, it is feels like them probably won’t release them until December 31st (or maybe that’s just wishful thinking on our part).
Some vehicles will not qualify for the EV tax credit after the IRS issues its guidelines, due to the MSRP exceeding $55,000 for cars and $80,000 for trucks. There will also be income limits, meaning those earning more than $150,000 ($225,000 head of household, $300,000 combined) will also not qualify.
There is also a provision that allows buyers to take advantage of the EV tax credit in advance at the point of sale,
The confusion surrounding these new tax breaks for electric cars is unfortunate, and we wish they were a little easier and less abrupt to implement. But given the difficult political situation surrounding the passage of the bill, after the Senate reached a compromise, no one wanted to touch the language of the bill. So, unfortunately, with half the Senate unwilling to support this important piece of legislation, we got what we got.
We hope that the IRS will make it easier to implement the new tax credits for electric vehicles by implementing them all at once, and will be responsive to public comments, which we will let you know as they become available.
The number of plug-in hybrids on the list is a bit of a shame – it seems like hybrids should get a smaller share of the credits than full electric cars. But given the battery supply constraints we’re in, PHEVs do manage to electrify more cars per kWh than BEVs. So as long as people are plugging in their PHEVs rather than just using the engine, they are still benefiting in terms of decarbonisation.
Additionally, PHEV sales have been low for years and are not growing, while BEVs are growing. The all-electric mode is just a nicer experience, so we still expect this to lead to fewer ICE engines on the road.
Overall, despite these difficulties, the aims of the legislation will help solve the problems currently facing electric cars (mainly supply issues), encourage greener and more socially responsible sourcing of materials, and should apply to a much larger number of individual cars on the road than the earlier legislation due to the abolition of the limit for each manufacturer and the extension for another ten years.
While we will have challenges with the structure of the new EV tax credit in the coming months and years, the law includes some much-needed changes to the tax credit that should help the industry as a whole, along with many other climate spending and actions. are aimed at helping reduce emissions and improve the US’s position in the green energy economy of the future, so overall we are pleased with the law.
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