The Inflation Reduction Act, which President Joe Biden signed into law Tuesday, says that if automakers want their electric vehicles to qualify for tax credits, they must have final assembly in North America. The law, effective immediately, will terminate credits for approximately 70% of the 72 models previously eligible, according to the Alliance for Automotive Innovation.
About 20 Model Year 2022 and Early Model Year 2023 Vehicles will still make the discount for EV tax credits up to $7,500 until the end of the year under the new legislation. Any manufacturer that has assembled vehicles in North America and has reached the 200,000 EV credit limit will not be eligible for the new Clean Vehicle Credit this year. That still leaves the following models eligible:
Electric vehicles from model year 2022 eligible for Clean Vehicle Credit
- Audi Q5
- BMW 3 Series Plug-In and BMW X5
- Chrysler Pacifica PHEV
- Ford F series; Ford Mustang Mach E; Ford Transit van
- Jeep Grand Cherokee PHEV
- Jeep Wrangler PHEV
- Lincoln Aviator PHEV and Lincoln Corsair plug-in
- lucid air
- Nissan Leaf
- Rivian EDV; Rivian R1S; Rivian R1T
- Volvo S60
Electric vehicles from model year 2023 eligible for Clean Vehicle Credit
- BMW 3 Series Plugin
- Mercedes EQS
- Nissan Leaf
EVs that have used up their tax credit
- 2022 Chevrolet Bolt EUV; 2022 Chevrolet Bolt EV; 2023 Bolt EV
- 2022 GMC Hummer Pickup & SUV
- 2022 Tesla Models 3, S, X and Y
- 2023 Cadillac Lyriq
The signing of the law means that EVs sold by Toyota, Hyundai, Porsche, Kia and others will no longer qualify for the tax credit. However, if a customer made a non-refundable deposit or deposit of 5% of the total contact price before Biden signed into law, they may still be eligible. Many automakers had urged customers to close deals and make deposits to get a few more tax credits.
Additional provisions are expected to come into effect on January 1, 2023. For example, there will be new restrictions on the purchase of batteries and minerals, as well as price and income limits. The start of the year will also set the clock back for General Motors and Tesla to qualify for EV tax credits again.
By 2024, buyers will be able to transfer their credits to dealers when purchasing the vehicles to lower the retail price.
The US Department of Energy noted that some manufacturers produce vehicles in multiple locations. The construction site can be confirmed by referencing a vehicle’s vehicle identification number using the VIN Decoder tool.