Many electric vehicles that are currently eligible for tax credits will be exempt from the new bill, but some of the most popular models are currently not eligible for government support, it will only qualify for the new tax incentives. Meanwhile, automakers warn that the majority of US-made vehicles will miss out on the most generous credits because of strict EV battery procurement requirements (which are meant to exclude China).
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Here’s to anyone who are interested in buying an electric car, they should know about tax breaks under the Inflation Act.
The bill introduces two new electric vehicle credits totaling up to $7,500 per vehicle. New electric vehicles are eligible for a $3,750 credit if they meet certain criteria.
Final assembly must be done in North America. Price must be less than $55,000 ($80,000 for pickup or SUV). Buyer’s annual income must be less than $150,000 (or higher if married or head of household).
An additional $3,750 credit applies if your EV’s battery meets fairly stringent requirements. Automakers have expressed concern that these requirements will prevent full credits from being available for U.S. vehicles.
Not all batteries included
To be eligible for the $7,500 full credit, the car battery must be assembled in North America or in a country that has a free trade agreement with the United States. It cannot be made in China, where most batteries are made today. In fact, automakers are warning that the cars currently on the US market won’t get full credit given China’s importance in the battery market.
Center for Automotive CEO Carla Bailo said in research, “Even Tesla, which has the largest share of American content, cannot compete with the Gigafactory in Nevada.”
