Automotive News Europe — 2023-04-18
Automotive Industry
The U.S. Treasury said that Volkswagen, BMW, Nissan, Volvo, Hyundai and Rivian electric vehicles will lose access to a $7,500 tax credit under new battery sourcing rules.
The new requirements effective Tuesday will also cut by half credits for the Tesla Model 3 Standard Range Rear Wheel Drive to $3,750 but other Tesla models will retain the full $7,500 credit.
Only 10 electric and plug-in hybrid vehicles will qualify for the federal tax credit after stricter battery-sourcing rules take effect and render most plug-in models ineligible.
General Motors, Ford and Tesla all have at least one EV that will qualify, while Ford and Stellantis each have one eligible plug-in hybrid model. No other automakers will have a vehicle for sale that fully meets the criteria.
Among vehicles losing credits Tuesday are the BMW 330e, BMW X5 xDrive45e, Genesis Electrified GV70, Nissan Leaf, Rivian R1S and R1T, Volkswagen ID4 as well as the plug-in hybrid electric Audi Q5 TFSI e Quattro and plug-in hybrid Volvo S60.
The rules are aimed at weaning the United States off dependence on China for EV battery supply chains and are part of President Joe Biden's effort to make 50% of U.S. new vehicle sales by 2030 EVs or plug-in hybrids.
General Motors' electric Chevrolet Bolt and Bolt EUV will qualify for the full $7,500 tax credit.
GM said earlier it expected at least some of its EVs would qualify for the $7,500 tax credit under the new rules, including the 2023 Cadillac Lyriq and upcoming Chevrolet Equinox EV SUV and Blazer EV SUV. The treasury said all GM EVs will qualify.
Earlier, Chrysler-parent Stellantis and Ford said most of their electric and plug-in models would see tax credits halved to $3,750 on 2023 April 18. The treasury confirmed the automakers' calculations.
The rules were announced last month and mandated by Congress in August as part of the $430bn Inflation Reduction Act (IRA).
The IRA requires 50% of the value of battery components be produced or assembled in North America to qualify for $3,750, and 40% of the value of critical minerals sourced from the U.S. or a free trade partner for a $3,750 credit.
The law required vehicles to be assembled in North America to qualify for any tax credits, which in 2022 August eliminated nearly 70% of eligible models and on 2023 Jan. 1 new price caps and limits on buyers income took effect.
Last week, the Environmental Protection Agency proposed new emissions rules that forecast 60% of new vehicle sales in the U.S. in 2030 would be EVs.
A preliminary administration analysis found nearly 65% of first-quarter EV sales qualified under North American final assembly and price cap requirements; more than 90% of those previously eligible first quarter sales remain eligible for at least a $3,750 credit.
The treasury in December said EVs ineligible for the $7,500 consumer tax credit could qualify for a commercial leasing $7,500 credit.