Electric Vehicle Tax Credits 2023: Which models qualify for up to $7,500 in tax credits?

CNN
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The Treasury Department has revealed which vehicles will be eligible for new electric vehicle tax credits. Fewer models qualify for the new support than in previous years, but some of the most popular electric vehicles still qualify, according to Monday’s announcement.

Under the new rule, consumers can recover up to $7,500 in tax credits on qualifying vehicles.

Sixteen new models and some variations of them are eligible for all or half of the new credit, while nine models—mostly foreign cars—are currently no longer eligible.

Most of the cars that qualify so far are made by the “Big Three” EV manufacturers in the US – Ford

(F)And General Motors and Stelantis — plus Tesla

(TSLA).

Here’s what you need to know.

2022-2023 Chrysler Pacifica PHEV

2022-2023 Jeep Wrangler PHEV 4xe

2022-2023 Jeep Grand Cherokee PHEV 4xe

2022-2023 Ford F-150 Lightning (Standard and Extended Range)

2022 Ford E Transit

2022-2023 Ford Mustang Mach-E (Standard and Extended Range)

2022 Ford Escape Plug-in Hybrid

2022 Lincoln Corsair Grand Touring

2023 Lincoln Aviator Grand Touring

2022-2023 Chevrolet Bolt

2022-2023 Chevrolet Bolt EUV

2023-2024 CADILLAC LYRIQ

2024 Chevrolet Silverado EV

2024 Chevrolet Blazer EV

2024 Chevrolet Equinox EV

2022-2023 Tesla Model 3 Standard Range RWD

2022-2023 Tesla Model 3 Performance

2022-2023 Tesla Model Y AWD

2022-2023 Tesla Model Y Long Range AWD

2022 Tesla Model Y Performance

Nine models, most of which are foreign brands including Hyundai and Nissan, do not qualify for the new tax credit. However, that could change — and likely will — in the coming months and years as some of these brands build factories in the US to assemble their cars.

a A separate tax credit applies to used electric vehicles, and does not carry such stringent requirements on battery content or manufacturing. Used electric cars qualify for less than an inclusive tax credit and also come with certain income requirements.

Similarly, rental vehicles can also qualify for a $7,500 tax credit without some of the strict rules around car batteries and final assembly, which means consumers who want more choices on which model to drive can settle for leasing rather than buying outright.

The list of eligible new and used electric vehicles will be updated in www.fueleconomy.gov.

Under the new rule, consumers can receive up to $7,500 in tax credits on qualifying vehicles. There is no limit to the number of electric vehicles you can sell with tax credits, as long as those vehicles meet the requirements. This is a change from the previous rule, which limited the number of vehicles that could be sold with tax incentives.

Some cars that were previously eligible for tax credits have been removed under the new rule. But administration officials told CNN that more cars will be added to the list as automakers scramble to move their factories and supply chains to the United States and other countries with these free trade agreements, though that could take months or even years.

The new Treasury bill on electric vehicles comes from the Lower Inflation Act, the Climate and Clean Energy Act that Congress passed last year. The rules are written in a way to help move the supply chain of base metals needed for things like electric car batteries, solar panels and smaller rechargeable batteries away from China.

There are two main requirements that automakers must meet if they want their electric vehicles to be eligible for the $7,500 tax credit: a basic metal requirement and a battery component requirement, which are each worth $3,750.

Critical mineral requirements require that a certain percentage of the value of the critical metals that power electric vehicle batteries—such as lithium, nickel, graphite, and copper—must be mined or processed in the United States, or in a country it has a free trade agreement with. It was also possible for the metal to be recycled in North America. Battery component requirements require that a certain percentage of a value battery component be manufactured or assembled in North America.

Importantly, these requirements will increase over several years. For critical metals, the percentage will start at 40% in 2023 and rise each year to 80% by 2027. For battery components, the percentage will start at 50% and rise each year to 90% by 2028.

Administration officials and experts agree that the rules are incredibly complex to be implemented in a very short time frame.

“It’s very complicated,” White House Senior Adviser John Podesta told CNN recently.

21 countries will have free trade agreements on critical minerals with the United States: Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama and Peru Singapore and Japan.

Countries including Chile and Australia are noteworthy, both of which have vast supplies of lithium and large-scale mining operations. Senior administration officials said the new rule would make lithium in these countries more competitive: Instead of going to China, the metal could go to Japan or Korea, or directly to the United States. Korea, Mexico and Japan have large car assembly operations, and many of these cars are sold in the United States.

Biden said the United States is also negotiating to add the European Union to the list, and other countries may be added in the future.

The past few months have seen a flurry of announcements from auto companies moving electric vehicle and battery production plants to the United States and neighboring countries.

But experts and officials say starting the critical mineral supply chain — mining and refining critical minerals — will be the most difficult aspect to change. This is in large part because China has a tight grip on it. The United States has only a few lithium mines, located in Nevada. Companies are vying to start mining lithium around California’s Salton Sea, though no commercial operations have started yet.

Boylan said the DOE “could grant a loan to build a battery manufacturing facility.” “It’s a whole different ball game than talking about letting an open lithium mine.”