The U.S. Treasury Department announced new guidance today regarding EV tax credits, indicating that electric vehicles leased by consumers can qualify for upwards of $7,500 in commercial clean vehicle credits starting January 1st of the 2023 calendar year.
According to a recent report from Reuters, the decision qualifies some vehicles assembled outside of North America for the EV tax credits, supporting overseas automakers vying to boost consumer EV access. Back in August, the U.S. Inflation Reduction Act (IRA) ended $7,500 consumer EV tax credits for the purchase of vehicles assembled outside North America, resulting in a backlash from overseas automakers hoping to offer new EV models eligible for the credit in the U.S.
The commercial credit also does not include the same battery mineral and component restrictions included in the IRA, the latter of which includes a phasing out of materials and components sourced from China. Earlier this month, Treasury said it would delay guidance on sourcing requirements for new EV batteries until March. The IRA stipulates that beginning in 2023, 40 percent or more of critical minerals must be manufactured or assembled in North America, with that percentage rising 10 percent every following year. Additionally, 50 percent or more of the EV battery component value must be manufactured or assembled in North America, with that percentage also rising 10 percent every following year. These requirements are also satisfied if related materials are sourced from countries with an established free trade agreement with the U.S.
The new law passed in August also eliminates a 200,000-vehicle manufacturing cap for EV tax credit qualification, once again opening up the credits to GM. The Treasury is set to release a comprehensive list qualifying EVs this weekend.
Notably, the new Treasury guidance does not change the definition of North American assembly to make additional EVs eligible for purchase. However, the Treasury did say it was leaning on “long withstanding tax principles” with regard to qualifying EV tax credits for consumer leasing.