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Almost all cars are now ineligible for the EV tax credit due to the new rules

On April 18, the Treasury published amended instructions regarding battery components.

The US Treasury Department has announced new guidelines for the EV tax credit that dramatically restrict the number of vehicles eligible for the $7,500 credit.

EV Tax Credit Eligibility Based On Various Parameters  

The Inflation Reduction Act of 2022 modified the credit by adding income constraints, pricing limits, and other restrictions.

President Joe Biden signed the bill into law in August, but final specifics like battery components and crucial minerals were still being ironed out in January.

While sales of electric vehicles continue to increase, many new and prospective customers have issues regarding eligibility for federal tax credits on electric vehicles, particularly since a raft of new credits have been reintroduced for US consumers (alongside their fair share of confusing and ever-evolving conditions)

In addition, additional terms adopted on January 1, 2023, restrict the number of eligible EVs based on a variety of parameters relating to domestic production in the United States.

On March 31, the Treasury Department announced that fifty percent of a car’s battery must be constructed or manufactured in the United States for the vehicle to be eligible for a credit of up to $3,750. This percentage increases annually until it reaches 100 percent in 2029.

40% of the battery’s essential materials, including graphite, lithium, and cobalt, must be supplied from the United States or one of the twenty nations with which the United States has a free trade agreement.

This percentage will climb until 2027 when it will reach a maximum of 80%.
Currently, Chinese businesses produce 56% of all EV batteries on the market. According to the Biden administration, this puts the United States at a competitive disadvantage and encourages international instability.

Read more: Tesla deliveries reach new record levels following EV price cuts

Russia’s Effect On Gas Spikes

Almost-all-cars-are-now-ineligible-for-the-ev-tax-credit-due-to-the-new-rules
Eligible EVs based on a variety of parameters

Adoption of clean vehicles is essential to reducing emissions in transportation and safeguarding Americans from the kind of gas price increases we seen at the beginning of [Russian President Vladimir] Putin’s brutalization of Ukraine. Lily Batchelder, assistant secretary for tax policy at the Treasury, told reporters on March 23.

Beginning the next year, automobiles containing battery components from a foreign entity of concern, which includes China, Russia, Iran, and North Korea, will not be eligible for the credit.

When the current tax season concludes on April 18, 2023, the new regulations will go into force. The Treasury Department has not yet released an updated list of approved EVs, but GM announced on Friday that at least three of its vehicles — the Cadillac Lyriq, the new Chevrolet Equinox EV SUV, and the Blazer EV SUV — are already eligible for the full $7,500 credit.

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