US introduces new battery ruling for EV subsidies

The US American tax agency Internal Revenue Service (IRS) released the official list of EVs and PHEVs that qualify for the tax credit in 2024, with the number of models reduced from 43 to 19. This also includes different versions of the same vehicle type. The credit is to be applied as a rebate at the time of purchase.

The main idea behind the new sourcing regulation is to support domestic battery material and cell production in the US, although this has also affected American manufacturers such as Tesla. The Mustang Mach-E manufactured in Mexico will not qualify either, while Ford’s F-150 Lightning pickup truck will receive the full subsidy due to being manufactured in Michigan.

While this has prompted manufacturers to change their sourcing strategies, the information has been known for some time and the industry had sufficient run-up to adapt, as a VW spokesperson stated: “We are optimistic that MY2023 ID.4s and all MY2024 ID.4s will be eligible under the new rules.”

The full vehicle list includes two variants of the Chevrolet Bolt, the Chrysler Pacifica PHEV, Ford’s Escape PHEV and both the standard and extended battery F-150 Lightning. There are more hybrids with the Jeep Grand Cherokee PHEV and Wrangler PHEV. Lincoln’s Corsair Grand Touring also qualified, as did Rivian’s R1T and R1S vehicle variants. Tesla managed to qualify with the Model 3 performance, Model X Long Range and three different Model Y variants. However, the list is expected to expand as manufacturers adapt to the new regulation. The initial deadline for automobile manufacturers to document their production process for approval was December 18th; however, more carmakers still handed in declarations after the date. For example, General Motors stated that the Lyriq and Blazer EV will regain eligibility in early 2024.

Update 04 January 2024

General Motors has said it would ensure that its new electric vehicles remain price-competitive, even as new rules from the US Treasury disqualify some of the carmakers’ electric vehicles for the $7,500 consumer tax credit this year. GM confirmed to the Detroit Free Press that it would provide consumers with $7,500 off the price of any electric vehicles that are no longer eligible for the government credits under the new rules.

For now, GM writes that the offer will stand until GM can source the components from places that make the car eligible again for the tax credit. Apparently, GM is not missing many components to qualify again.

“The Cadillac Lyriq and Chevrolet Blazer EV will temporarily lose eligibility for the clean vehicle credit on Jan. 1, 2024 because of two minor components,” explained General Motors spokesperson Liz Winter, adding: “While we await final rules, GM has pulled ahead sourcing plans for qualifying components in early 2024 and will advocate for our dealers and customers who purchase vehicles built ahead of the new guidance.”

Similarly, Ford also plans to balance the missing subsidy for vehicles that no longer qualify, in this case, the Mustang Mach-E, as the F-150 Lightning has qualified, as stated above.

reuters.com, fueleconomy.org (full list), insideevs.com, freep.com (update)