New EV Tax Credit Rules Eliminate 70% of Previously Eligible Vehicles
The newly signed Inflation Reduction Act immediately restricts EV tax credits to vehicles assembled in North America, cutting out about 70% of previously eligible models. Only around 20 models from manufacturers like Ford, BMW, and Nissan currently qualify for the $7,500 credit.
The Biden administration's newly signed Inflation Reduction Act immediately changes the rules for electric vehicle tax credits by requiring final assembly to take place in North America. This strict new requirement eliminates about 70% of the 72 EV models that were previously eligible for the financial incentive. Approximately 20 models from the 2022 and early 2023 model years still qualify for the up to $7,500 Clean Vehicle Credit through the end of the year.
Vehicles that currently make the cut include models from Audi, BMW, Chrysler, Ford, Jeep, Lincoln, Lucid, Nissan, Rivian, and Volvo. However, popular manufacturers like Toyota, Hyundai, Porsche, and Kia see their vehicles completely lose eligibility under this legislation. Additionally, automakers that have already reached their 200,000-vehicle cap, such as Tesla and General Motors, remain ineligible for the rest of 2022 despite assembling their cars in North America.
The legislation includes a narrow exception for customers who made a non-refundable deposit of at least 5% before the law's signing. Additional provisions take effect on January 1, 2023, introducing battery mineral sourcing restrictions, vehicle price caps, and buyer income limits. This upcoming deadline also resets the credit clock for Tesla and General Motors, and by 2024, buyers will have the option to transfer their tax credits directly to dealers to lower the purchase price at the time of sale.