The Inflation Reduction Act, the flagship climate bill, was signed into law today, changing the availability of electric vehicle tax credits. Now, only EVs assembled in North America qualify for the credits. Today, the US government released a preliminary list of which vehicles currently qualify for the $7,500 EV tax credit.
There are a number of provisions in the new climate bill that affect the availability of EV credits, and these provisions will be phased in over the coming months and years. Most of them are focused on bringing more EV and battery production to the US.
But the timing of the phase-in of the various provisions has created a lot of confusion in the EV community about which vehicles will qualify and when.
The Department of Energy’s Alternative Fuels Data Center has released its list of final assembly vehicles in North America, and we’ve copied the list below.
We’ve added links where possible so you can search local dealer inventory for the car you’re looking for. We’ve also added our notes to the “note” column to clarify which models qualify.
The list includes vehicles that are assembled in North America, but for which manufacturers are currently over 200,000 in previous credit. This cap is lifted on January 1, 2023, so cars labeled as “manufacturer sales limit met” will not qualify for electric car 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 (for example, VW moves production of the 2023 ID .4 at Tennessee). We cannot guarantee that any particular customer will have access to credit and are providing the best information we can.
Further, some models may change production mid-year or based on specific trim levels, so you should confirm that your individual vehicle is assembled in a North American factory. AFDC recommends that you use the NHTSA VIN decoder on your VIN to confirm that it was assembled in North America. The name of the country of final assembly factory can be found under “factory information” at the bottom of the page.
Additionally, the IRS has released a page explaining Section 30D of the Internal Revenue Code, which is the section that contains the EV tax credit. This includes a description of what is a “binding written contract,” which allowed EV buyers to receive the “old” loan if they signed a purchase contract before IRA signing day (today).
Other requirements not yet phased in include battery material and critical mineral sourcing guidelines, which will be developed by the IRS. The IRS should issue those guidelines by the end of this year, but from tongue to cheek, it feels like the IRS maybe 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 once the IRS issues its guidelines because they are over the $55K MSRP limit for cars and $80K MSRP for trucks. Income limits will also be imposed, meaning those earning over $150,000 ($225,000 head of household, $300,000 combined filing) will not qualify.
There’s also a provision to allow buyers to take advantage of the EV tax credit initially at the point of sale, but from our reading of the bill, that doesn’t appear to be in place until 2024.
The information in this article supersedes our old article, which had information on the “old” tax credit..
The confusion over these new EV tax credits is unfortunate, and we wish their application were a little simpler and a little less abrupt. But given the difficult political situation surrounding the bill’s passage, after the Senate reached a compromise, no one wanted to touch the bill’s language. So, unfortunately, with half the Senate unwilling to support this important legislation, we got what we got.
We hope the IRS will make it easier to implement the new electric vehicle tax credits by introducing everything at the same time, and will respond to public comments that we will let you know about as they become available.
The number of plug-in hybrids on the list is a bit unfortunate – it seems like hybrids should get a smaller share of the credits than full EVs. But considering the battery-constrained environment we live in, PHEVs manage to electrify more vehicles per kWh than BEVs. So as long as people are plugging in their PHEVs and not just using the engine, they are still a useful thing in terms of decarbonisation.
Also, PHEV sales levels have been low for years and are not growing, while BEVs are. All-electric is just a more enjoyable experience, so we still expect this to result in fewer ICE engines on the road.
Overall, despite these difficulties, the goals of the legislation will help address the challenges that EVs are currently facing (primarily supply challenges), encourage more environmentally and socially responsible sourcing of materials, and should apply to many rather individual cars on the road. than the previous legislation due to removing the producer cap and extending it for another decade.
While we will have some growing pains with the new EV tax credit structure in the coming months and years, the bill includes some much-needed changes to the tax credit that should help the industry as a whole, along with many other spending the climate. and actions to help reduce emissions and improve the US’s position in the green energy economy of the future, so on balance, we’re happy about the law.
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