The rules surrounding the $7,500 federal tax credits for electric vehicles are changing on Jan. 1.
Although it helps buyers by allowing dealers to apply the credit as an immediate discount, new restrictions on vehicle manufacturer's suggested retail price and manufacturing will make the shopping list smaller and can drive buyers away from certain brands and models.
Related: Why this legacy automaker is going slow into electric vehicles
The new rules for 2024 are intended to provide an incentive for manufacturers to build and source materials for its EVs in the United States rather than overseas.
The highlight of the restrictions regards "Foreign Entities of Concern," or FEOC, namely China, North Korea, Russia and Iran. EVs with battery components made or assembled by a company or subsidiary based in any of the listed nations will not be eligible for the credit.
EVs that have at least 50% of materials sourced from North America, or any of the countries that the U.S. has free trade agreements with will be eligible for a $3,750 rebate – but in order to get the full $7,500, said vehicle's batteries must have at least half of its components sourced from countries signed onto the USMCA agreement; the U.S., Mexico or Canada. Additionally, the raw minerals that go into making said components like lithium, nickel, cobalt, manganese, and graphite must be sourced from a country that the U.S. has a free trade agreement with.
Even if you do find an EV that fits all the criteria, you might end up paying up if certain conditions apply. Buyers looking at a sedan that costs over $55,000, or an SUV or truck over $80,000 won't get the credits, nor will individuals making over $150,000 or couples making over $300,000.
These new restrictions add a lot of pressure to the ever-growing list of manufacturers pumping out EVs to an already-crowded field. Ford announced that its popular Mustang Mach-E crossover SUV will not be eligible for the tax credit in 2024, and Tesla is urging buyers of its standard rear-wheel drive Model 3 and Model Long Range to buy before incentives are reduced to half once the clock strikes 2024.
Only 10 cars are eligible for the full $7,500 tax credit, with one Detroit manufacturer dominating the list.
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1. Chevrolet Bolt EV - $26,500
GM
The lowest priced EV in America may be bowing out for the 2024 model year, but a $7,500 tax credit added to one of the remaining units sitting on a dealer lot will result in an EV that can start at a hair or two under $20,000. If you like compact cars, this might be a great, inexpensive option.
2. Chevrolet Equinox EV - $48,995
According to the Detroit Free Press, the version launching in 2024 will not be the cheapest version with an anticipated $34,995 price tag. However, the version at $48,995 that will be available will come with a plethora of features including GM's (GM) -) Super Cruise and one-pedal driving, which will come in handy for commuters.
3. Ford F-150 Lightning - $49,995
This electric pickup from Ford (F) -) gets up to 320 miles with an available "extended-range" battery, but even with a few ticks on the options list, a good well-equipped model with tons of features, bells and whistles will just make it before the limit of the $80,000 MSRP cap for federal credits.
4. Tesla Model 3 Performance - $50,990
Tesla fanboys who miss the Dec. 31 deadline will have to ante up and upgrade to the top-of-the-line model if they want a Model 3 with full incentives. Though the credits will change, a long-range model with a reduced $3,750 credit versus a performance one with full credits will be set just $1,250 apart; a curious comparison for different minded drivers.
5. Chevrolet Silverado - $51,895
Unlike its Blue Oval rival, the consumer-focused Silverado EV RST First Edition coming out in 2024 will top six figures. Chevrolet says that more cheaper variants are on the way, but those looking for a work truck might consider the WT variant, which stated at a smidge near $52,000.
6. Tesla Model Y Performance - $52,490
Image source: Tesla
Tesla heads looking for more room than the Model 3 can opt for the Model Y equivalent, which benefits from its classification as an SUV. With an $80,000 MSRP cap, buyers can still option their Musk machines with all the extras, including multi-coat paint color and the $12,000 "Full Self-Driving Capability" options.
7. Chrysler Pacifica PHEV - $53,425
Chrysler
The Chrysler Pacifica PHEV (STLA) -) may be a plug-in hybrid that still uses gas, but it carries a 16kWh battery that makes it eligible under the federal government's fine print. As its powertrain and materials are sourced and made in North America, it is a seven-seat family hauler that is eligible for a full $7,500 tax credit.
8. Chevrolet Blazer EV - $60,215
This new SUV from Chevrolet has a similar price to the Cadillac, but are directed at two different customers. While the Cadillac is based entirely on luxury and tech, the Blazer is all performance, as it boasts an aggressive look that sets it apart from the pack.
9. Cadillac LYRIQ - $58,590
Those looking for luxury might be attracted to the spacious Cadillac Lyriq, which packs lots of features for under the $80,000 threshold for SUVs. For $62,690, the five-seater Caddy packs driver assists like GM's Super Cruise, as well as cool passenger amenities like a panoramic power sunroof.
10. Tesla Model X - $79,990
If you want to maximize your Tesla experience, compromises will have to be made if a federal tax credit is in your crosshairs. Buyers who are perfectly okay with having a Tesla (TSLA) -) without any extras, like the $2,000 yoke steering wheel, or the $3,500 seven-seat configuration or the $12,000 "Full Self-Driving Capability" will have to adjust their priorities. Fortunately, those "Falcon-wing" rear doors come at no cost with the car.
