WASHINGTON — Electric vehicle tax credits for most models will drop or disappear in just under two weeks, according to major automakers as they take stock of new U.S. Treasury guidelines.
The new rules going into effect on April 18 were approved by Congress as part of the Inflation Reduction Act and aim to wean U.S. automakers off of battery supply chains largely controlled by China. They include requirements for battery component and critical mineral sourcing that will pare down vehicles that have otherwise been eligible since the law kicked in at the beginning of the year.
Ford Motor Co.'s F-150 Lightning pickup and the Lincoln Aviator Grand Touring will remain eligible for the $7,500 credit, the company announced Wednesday.
All other models that have been eligible will now get $3,750, just half of what they have qualified for. Those include the Mustang Mach-E, the Ford E-Transit van, the Ford Escape plug-in hybrid and the Lincoln Corsair Grand Touring.
Stellantis NV has had three vehicles qualify for the full $7,500 credit since the beginning of January: The Chrysler Pacifica PHEV, Jeep Grand Cherokee 4xe and the Jeep Wrangler 4xe. Only the Chrysler Pacifica will keep the full credit, while the other two will drop to $3,750.
General Motors Co. said it expects the Cadillac Lyriq to remain eligible for the full credit, as will other EVs launching this year, the Chevrolet Equinox SUV and the Blazer SUV. The Chevrolet Bolt and the Bolt EUV should qualify "for some level of credit," the company said Friday.
Tesla Inc. also posted on its website that the $7,500 credit for the Model 3 Rear-Wheel Drive is "anticipated to be reduced" due to the new guidance.
Many of the companies noted that all of the models that have met the basic requirements to date — assembled in North America and under specific price caps — will continue to be eligible for the full $7,500 tax credit when purchased by a company, including for leased vehicles.
Most also indicated that they expect more vehicles to be eligible as more minerals and battery components become available in the U.S. and with allied countries.
"I think we're in good shape," GM CFO Paul Jacobson said at a Bank of America conference Tuesday. "There's no doubt that whether you're looking at the production credits, or you're looking at the consumer credits, that this is a big boost to help build infrastructure. It's creating jobs in the US and in North America and and we're investing heavily alongside it to help accelerate or expedite the transformation where we can."
Automakers' announcements align with analysts' predicted drop in eligibility, but didn't wipe out the supply of EVs. When the IRA first passed, leading industry groups estimated no EVs would qualify once the requirements went into effect.
Still, the first three months of the year "may go down as the highwater mark for EV tax credit eligibility since the IRA passed last year," Alliance for Automotive Innovation CEO John Bozzella said in a statement.
In order to qualify for $3,750 of the $7,500 EV tax credits formed under the Inflation Reduction Act, a vehicle must have half of its battery components made in North America. To get the other $3,750, at least 40% of the value of the minerals in the battery must be extracted or processed in the United States, or come from a country the United States shares a free trade agreement with. Those thresholds rise annually for the next several years.
The vehicle must be built in North America and stay under $80,000 for a van, pickup truck or SUV or under $55,000 for a sedan. A final complicating factor comes into play in 2024: A vehicle is disqualified if any of its battery components come from a so-called "foreign entity of concern" like China or Russia. In 2025, that extends to any of its critical minerals.
The Treasury guidance released Friday doesn't address how it plans to interpret that rule, and plans to release further guidance on it before it comes into effect.
"We now know the EV tax credit playing field for the next year or so," Bozzella said of the coming rules for foreign entities of concern. "March 2023 was as good as it gets."
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(Detroit News staff reporter Kalea Hall contributed to this story.)
