Biden signs the Inflation Reduction Act with EV subsidy reform

US President Joe Biden has signed the Inflation Reduction Act. This partially puts the tax credit reform for electric vehicles in the USA into immediate effect.

In terms of tax credits, the requirement for final assembly of the vehicles in North America is effective immediately. The Alternative Fuels Data Center (AFDC) at the US Department of Energy has published a preliminary list of BEV and PHEV models that qualify for the new tax credit on this basis. According to US media, the exact date from which requirements apply (and which vehicles thus qualify) had recently caused confusion in the EV community.

The official list of models also only is only partially clear, since it also contains models from manufacturers who have already reached the upper limit of 200,000 plug-in vehicles sold. As reported, this upper limit will fall, but not until 1 January 2023, which means that the corresponding models from GM and Tesla are already on the list, but do not qualify until the turn of the year.

Other requirements of the reformed tax credit, such as the one on the origin of battery materials, will also not take effect until later. This requirement is not yet included in AFDC’s list. However, just because the vehicle is on the list does not mean that buyers will also receive the tax credit. The amendment to the scheme also introduced a new income cap. For their part, people with an annual income of more than $150,000 (or $300,000 in joint household income) are no longer eligible for the tax credit.

The VW ID.4 is currently missing from the list. The ID.4 was listed unofficially by Forbes magazine  – noting the condition that it was an example from Volkswagen’s US plant in Chattanooga and not an import model from Zwickau. Since series production in Tennessee is not yet officially underway, the ID.4 will probably be added later. The AFDC recommends that customers themselves use a so-called VIN decoder, where the origin of the respective vehicle can be clarified on the basis of the chassis number. This is because it could be that the manufacturers themselves change production in a current model year so that the vehicles are eligible again.

The amendment to the EV tax credit was the subject of lengthy negotiations in the USA – as were many other parts of Joe Biden’s “Build Back Better” plan. After the agreement in the Senate, in which the previously renegade Democratic Senator Joe Manchin acquiesed, things moved very quickly: last week the Inflation Reduction Act passed the Senate and early this week, the House of Representatives. Biden’s signature was pretty much only a formality at this stage.

electrek.co, afdc.energy.gov (vehicle list)