Starting tomorrow, only six EVs will still qualify for a $7,500 federal tax credit
This is after revised guidelines were announced in March.
The IRS released a list of electric vehicles that still qualify for the full $7,500 federal tax credit after strict new guidelines, announced back in March, officially go into effect on April 18th. The list is very short, as just six EVs now qualify under the new terms. The updated rules pertain to EV batteries and cut out China as an approved trading partner, so we knew the vehicle list would shrink, as most electric vehicles use batteries manufactured in China or by Chinese companies.
If you want to get that full tax credit, choose from the Cadillac Lyriq, Chevy Bolt, Chevy Bolt EUV, some Tesla Model 3 versions, some Tesla Model Y versions and Ford F-150 Lightning. Many EVs lose the full credit moving forward, like the Nissan Leaf and Volkswagen ID.4. So check the full list before zeroing in on your next car purchase. $7,500 is nothing to sneeze at.
EVs shunted out of the exclusive full tax-credit club may still qualify for a half credit of $3,750, so long as they meet certain requirements. Three PHEVs also qualify for the half credit and three more qualify for the full tax credit, including models manufactured by Ford, Lincoln, Chrysler and Jeep. These credits are not about excluding hybrid technology and are all about making sure components are sourced properly.
Here's how that breaks down. Battery components that are 50 percent made or assembled in the USA qualify for the first half of $3,750 and if the company sources at least 40 percent of critical minerals from the US or free trade partners, the second $3,750 kicks in. If a company meets one or the other standard, the vehicle gets a half credit.
While the list winnowing down to just six vehicles makes for a good headline, it should beef up as automobile manufacturers make changes to meet the rules. New EVs that meet the component sourcing standards will get added to the list and other vehicles will get re-added as manufacturers open new factories in the US and other approved countries. New trade deals could also impact the list of approved vehicles as time marches forward. However, these rules grow stricter over time. Batteries must be completely made in North America by 2029 to continue to stay on the IRS’s good side and get that full $7,500 credit.
