WASHINGTON (AP) — As part of the rollout of a massive new climate, tax and health care bill, the US government is moving forward with its plan to grant new tax credits to electric vehicle buyers.
Several new websites launched Tuesday to help people identify which vehicles qualify for the credits. Based on data submitted to the National Highway Traffic Safety Administration, at least 31 new 2022 and 2023 models qualify for the tax credit. For starters, they must be made in North America to qualify.
President Joe Biden Signed Democrats’ Groundbreaking Climate Change and Healthcare Bill Tuesday in law. It includes a tax credit of up to $7,500 that can be used to cover the cost of purchasing an electric vehicle.
Models included are: the 2022 Ford F-series electric pickup, BMW X5, Nissan Leaf, Chevrolet Bolt, Jeep Wrangler plug-in hybrid and all four Tesla models.
But some models could exceed the sticker price limits in the complex law, and it remains to be seen whether automakers can find minerals or make batteries that qualify for the credits.
Consumers can contact: and key in the 17-digit vehicle identification number of the EV they want to buy to make sure it’s made in the US, Canada, or Mexico. The Ministry of Finance has also released a FAQ page about the provisions of the new law.
As of Tuesday, tax credits will no longer be available for vehicles assembled outside of the US, Canada or Mexico. But people who signed EV purchase contracts before Tuesday could still get the credit. The other provisions of the Electric Vehicle Act come into effect on January 1.
A Treasury Department official told reporters during a phone call on Tuesday that the plan will bring the U.S.’s 2030 climate targets within reach and ensure Americans can afford to buy an electric car.
The measure’s approval sparked a struggle from automakers to accelerate efforts to source North American-made batteries and battery minerals from the US, Canada or Mexico to ensure EVs qualify for the credit.
As automakers announce US battery plants and attempt to secure domestic mineral supplies, a major industry association has warned that the vast majority of electric vehicles now for sale in the US are ineligible. for the full credit under the Inflation Reduction Act.
“We are working overtime to locate our supply chains and ramp up production,” Chris Smith, Ford’s chief government affairs officer, said in a statement.
The credits are important because no automaker wants to be in a position where a competitor sells vehicles at a $7,500 price advantage, especially since the credits are largely aimed at middle-class buyers.
“The biggest obstacle to electric vehicle adoption is cost,” said Michelle Krebs, executive analyst at Cox Automotive. “So a $7,500 difference is significant for one vehicle compared to another for the portion of the market it targets.”
By law, an electric vehicle must contain a battery built in North America with minerals mined or recycled on the continent to qualify for the credit.
And those rules are getting stricter over time — to the point where in a few years it might not be EVs eligible for the tax credit, said the Alliance of Automotive Innovation, a major industry group. At present, the alliance estimates that about 50 of the 72 electric, hydrogen or plug-in hybrid models sold in the United States would not meet the requirements.
Under the $740 billion economic package that Biden signed into law, the tax cuts are set to take effect next year. For an EV buyer to qualify for the full credit, 40% of the metals used in a vehicle’s battery must come from North America. By 2027, that required threshold would be 80%.
If the metal requirement is not met, the automaker and its buyers are eligible for half the tax break, $3,750.
A separate rule would require half the value of the batteries to be manufactured or assembled in North America. If not, the rest of the tax credit is lost. Those requirements are also getting stricter every year, eventually reaching 100% by 2029. Yet another rule would require the EV itself to be manufactured in North America, excluding vehicles made abroad from the tax credit.
The idea behind the requirement is to boost domestic manufacturing and mining, build a robust battery supply chain in North America, and reduce the industry’s reliance on overseas supply chains that can be subject to disruption.
But the production of lithium and other minerals used to produce EV batteries is now dominated by China. And the world’s largest producer of cobalt, another component of EV batteries, is the Democratic Republic of Congo.
The tax credit would only be available to couples with incomes of $300,000 or less or singles with incomes of $150,000 or less. And any trucks or SUVs with sticker prices over $80,000 or cars over $55,000 aren’t eligible, knocking many EVs off the credit.
There is also a new $4,000 credit for used EV buyers, a facility that could help modest-income households go electric.
The Treasury Department, which manages the tax credits, said more guidelines will be forthcoming, and was unable to say which vehicles would qualify for credits after all the provisions of the law were considered.
