Biden administration signs new EV tax credit into law

According to the Inflation Reduction Act, recently signed into law by President Joe Biden, automakers must complete the final assembly of their electric vehicles in North America in order to qualify for tax credits. The regulation, which is effective immediately, eliminates credits for nearly 70% of the 72 vehicles that formerly qualified, according to the Alliance for Automotive Innovation.

Some of the EV tax credit adjustments made by the Inflation Reduction Act, which are intended to promote the adoption of "clean" vehicles, may be viewed by industry makers as both good and bad news. Additionally, there are numerous uncertainties regarding the EV tax credit's operation for the remainder of 2022. However, some consumers might approve of other modifications made to the Inflation Reduction Act's electric vehicle tax credit.

The Inflation Reduction Act extends the up to $7,500 EV tax credit for EVs put into service after December 31, 2022, for a total of 10 years, or until December 2032. The calculations used to determine the credit's precise value will take the sourcing and assembly of the car into account.

This year's new Clean Vehicle Credit is not available to manufacturers whose vehicles are built in North America and have met their 200,000 EV credit threshold.

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 Plug-In
• ·        Mercedes EQS
• ·        Nissan Leaf

EVs that have used up their tax credits:

• ·      2022 Chevrolet Bolt EUV; 2022 Chevrolet Bolt EV; 2023 Bolt EV
• ·        2022 GMC Hummer Pickup and SUV
• ·        2022 Tesla Models 3, S, X and Y
• ·        2023 Cadillac Lyriq

Since the bill has been signed, EVs sold by Toyota, Hyundai, Porsche, Kia, and other automakers are no longer qualified for the tax credit. Customers may still be eligible, though, if they paid a 5% non-refundable down payment or deposit before Biden signed the legislation. In order to get a few more tax credits, many manufacturers had been encouraging customers to conclude transactions and pay deposits.

On January 1st, 2023, additional provisions are anticipated to take effect. For instance, there will be additional limitations on the source of minerals and batteries, and also price and income caps.

General Motors and Tesla will also be able to reapply for EV tax credits at the start of the new year.

By 2024, customers will be allowed to transfer their credits to sellers in order to lower the sale price when buying the automobiles.

Many manufacturers make automobiles in several locations, according to the U.S. Department of Energy. By using the VIN decoder tool and a car's Vehicle Identification Number, the build location can be verified.