Effective Monday, new battery sourcing rules have rendered several electric vehicles ineligible for tax credits of up to $7,500, according to the U.S. Treasury. Notable models affected include the Nissan Leaf, Tesla Cybertruck All-Wheel Drive, certain Tesla Model 3s, and the Chevrolet Blazer EV. The guidelines, aimed at reducing reliance on Chinese suppliers in the U.S. electric vehicle supply chain, reduced the number of qualifying EV models from 43 to 19.
Tesla anticipates Cybertruck qualification in 2024. Other affected automakers, such as Volkswagen and Nissan, are working to meet the revised requirements and regain tax credit eligibility. General Motors expects reinstatement for the Lyriq and Blazer EV in early 2024 after addressing minor component issues. The 2022 Inflation Reduction Act further reformed the EV tax credit, requiring North American assembly for eligibility, impacting around 70% of models previously eligible. In December, Tesla revealed the loss of federal tax credits for certain Model 3 variants, effective 1st January.
Electric Vehicle Development:
The recent changes in electric vehicle (EV) tax credits mark a significant shift in U.S. policy as the government enforces stringent battery sourcing rules to reduce dependence on Chinese suppliers. The U.S. Treasury’s guidelines, implemented on January 1, have resulted in a substantial reduction in the number of EV models eligible for tax credits, impacting major automakers like Tesla, Nissan, GM, Volkswagen, and BMW.
Tesla, a pioneer in the electric vehicle market, faces changes in tax credit eligibility for various Model 3 variants, while the Cybertruck All-Wheel Drive is expected to qualify later in 2024. Other manufacturers, such as Volkswagen and Nissan, are actively working with suppliers to meet the new requirements and regain eligibility for their EVs.
The broader automotive industry, including General Motors, is adapting its supply chains to align with the revised guidelines. Although certain GM EVs, like the Lyriq and Blazer EV, temporarily lose eligibility due to minor component issues, the company anticipates their reinstatement in early 2024 post-sourcing changes.
2024 Is Almost Here. Here’s The Latest On EV Tax Credits
Inflation Reduction Act:
These developments underscore the evolving landscape of EV incentives in the U.S., driven by the 2022 Inflation Reduction Act that mandates North American assembly for tax credit eligibility. The changes aim to encourage domestic production and reinforce the clean energy vehicle sector, aligning with broader sustainability goals. As automakers navigate these adjustments, consumers will witness a reshaping of the EV market dynamics and a renewed focus on local manufacturing and supply chain resilience.
