The U.S. Department of the Treasury announced that new battery procurement regulations will officially take effect starting Monday. The change resulted in more electric vehicles losing eligibility for the tax credit of up to $7,500, including the Nissan Leaf, Tesla all-wheel-drive Cybertruck, some Tesla Model 3s, and the Chevrolet Blazer EV, among others.
In December 2022, the U.S. Treasury Department released new battery procurement regulations detailing new battery procurement requirements aimed at promoting diversification of the U.S. electric vehicle supply chain. The regulations will come into effect starting Monday.
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As a result, the number of electric vehicle models eligible for the U.S. EV tax credit has been reduced from 43 to 19, which also includes different versions of the same model. The U.S. Treasury Department said some manufacturers have not yet submitted information about eligible vehicles, so the actual list may change.
Tesla did not immediately comment, but they said on their official website that “Cybertruck may qualify for federal tax credits later in 2024.”
The new rules allow buyers to claim a tax credit of up to $7,500 from the dealer at the time of purchase. However, the tax credit is still subject to limitations such as the vehicle price and the buyer’s income.
Models such as the Volkswagen ID.4, Tesla rear-wheel-drive Model 3, BMW X5 xDrive50e (BMWG.DE), Audi Q5 PHEV 55, Cadillac Lyriq and Ford E-Transit are no longer eligible for the tax credit.
Volkswagen said it was “in the process of confirming eligibility for the federal electric vehicle tax credit” starting Jan. 1. They are optimistic: “Under the new regulations, MY2023 ID.4s and all MY2024 ID.4s will be eligible.”
Nissan said it is working with suppliers to meet the changing requirements “and to regain tax credit eligibility for the Nissan Leaf in the future.”
“Automakers are adjusting their supply chains to ensure buyers continue to be eligible for the new clean car credit, working with allies and bringing jobs and investment back to the United States,” the Treasury Department said.
Ford said last month that its E-Transit would lose eligibility for the $3,750 tax credit, as would plug-in hybrid versions of the Mach-E and Lincoln Aviator Grand Touring. However, their F-150 EV Lighting and Lincoln Corsair Grand Touring still retain tax credit eligibility.
General Motors said all of its electric vehicles except the Chevrolet Bolt will temporarily lose eligibility for subsidies. They added that the Lyriq and Blazer electric cars would lose eligibility for subsidies because of two small components.
GM expects the Lyriq and Blazer electric vehicles to regain eligibility for subsidies in early 2024 after switching procurement sources. They also said that Chevrolet Equinox electric vehicles, Chevrolet Silverado electric vehicles, GMC Sierra electric vehicles and Cadillac OPTIQ vehicles produced “after switching procurement sources” will be eligible for full subsidies.
The U.S. Inflation Reduction Act of 2022 reforms the electric vehicle tax credit, requiring vehicles assembled in North America to qualify for the tax credit. This policy resulted in the disqualification of nearly 70% of eligible models.
Tesla disclosed in December that both its rear-wheel-drive and long-range Model 3 models would lose eligibility for federal tax credits starting Jan. 1, 2024. However, the high-performance Model 3 retains eligibility for the full $7,500 subsidy.
