U.S. Treasury Department Clarifies EV Tax Credit Restrictions
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The U.S. Treasury Department and U.S. Department of Energy are offering fresh guidance to clear up confusion about restrictions placed on EV tax credit eligibility by its “foreign entity of concern” rules, with a request for public commentary on the proposed interpretation.
The new interpretation of EV tax credit requirements will cut the number of current electric vehicle models eligible for federal tax credits, which currently range as high $7,500.
The new guidance indicates that EVs with battery components sourced from foreign entities of concern (FEOC) will not qualify for the full EV tax credit. The foreign entities referred to include at least four geopolitical rivals of the USA, with China, Russia, North Korea and Iran all on the list.
The restrictions will be applied in several stages. EVs made with battery components actually assembled or manufactured in one of the hostile countries will lose EV tax credit eligibility on January 1st, 2024. In 2025, this rule will be broadened to include batteries that use critical minerals extracted in or sold by these entities, widening the scope to raw materials as well as finished parts.
Ownership of a raw material producer or battery component manufacturer is also covered by the rule regardless of the supplier’s physical location. If the supplier is incorporated or headquartered in the enemy country, or if a hostile government has a 25 percent or greater ownership stake in it, then the EV tax credit restriction also applies.
The rule in the Inflation Reduction Act and its current clarification are meant to incentivize building an EV battery supply chain in the U.S. itself, reducing dependency on foreign rivals, particularly China. The government is also handing out $6 billion in grants for developing American processing and manufacturing plants for EV battery materials.
Notably, all current models of GM electric vehicles qualify for the full $7,500 EV tax credit under this new interpretation of the rules, with the exception of the GMC Hummer EV SUV and GMC Hummer EV Pickup. Among the models eligible for the credit are the Chevy Bolt EV, Chevy Bolt EUV, Chevy Blazer EV, Chevy Silverado EV and Cadillac Lyriq.
The previous interpretation of the sourcing rules went into effect on April 18th, 2023. More recently, the Department of Energy announced funding and loans of $15.5 billion to speed up the adoption of EVs, Finally, in October, the U.S. Department of the Treasury said EV tax credit reimbursement to dealers will occur within 72 hours of the sale of an eligible vehicle.
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Kinda late now that GM and Ford have already slowed RV investment and production.
Delaying lauches until batteries plants are himmjng along is only prudent. GM just opening 2 of 4 plants that take most of a year to ramp up.
If EV’s are so great in the eyes of Mary. Why doesn’t she put all regional, zone, district managers, etc. in an EV for a company car? You see them all driving big SUV’s and Trucks. It’s time for GM to practice what they preach. Doesn’t Mary care about the environment???
amen. Lets see all of them driving to show us how its done. what a great point
They are waiting on batteries assembly to rise.
Joe Bribem trying to pay us to buy an EV, no thanks.
I have a 2023 Bolt EUV ordered and expected to be produced a few days before production ends and then shipped to me from a dealer in Michigan early in the New Year. This is highly helpful as I can then qualify for the Colorado increased rebate starting Jan 1, 2024. However, I was also relying on the fed rebate.
But now the rules changed – Jan 1, 2024: (see Treasury press release date (Google, “Treasury Releases Proposed Guidance to Continue U.S. Manufacturing Boom in Batteries and Clean Vehicles, Strengthen Energy Security”.) The critical component and battery sourcing requirements both increase.
The official list of qualified cars at fueleconomy.gov/feg/tax2023.shtml doesn’t yet show any cars for 2024
This article from GM authority states “Notably, all current models of GM electric vehicles qualify for the full $7,500 EV tax credit under this new interpretation of the rules, with the exception of the GMC Hummer EV SUV and GMC Hummer EV Pickup. Among the models eligible for the credit are the Chevy Bolt EV, Chevy Bolt EUV, Chevy Blazer EV, Chevy Silverado EV and Cadillac Lyriq. ”
But who knows?
Impossible to figure out the source percentage of mineral for the EUV battery. I feel like the production side credit is safe given the Michigan factory producing them.
Anything i am missing?
You should be ok if you lease as they all will qualify.
Who cares if the new owner is leasing. Which every manufacturer, regardless of EV or PHEV over 7kwh, can sell a electric vehicle. In the U.S.
Well, I’m screwed on the Fed EV credit as my Lyriq is not scheduled to reach the dealer until Jan 2nd or 3rd. Waited almost 2 years for the car; order converted from 2023 debut model in March 2023 to the 2024. Finally car produced and rules of the game change once again for EV credit. Unfortunately, I won’t take delivery as the EV credit of $7500 was my incentive to move from gas to electric car.
You have all of 2024 tax year yet. Just file without then file an amendment as the rules are always changing for the consumer.