By John Bozzella
The Treasury Department is out with its long-awaited and (almost) final set of proposed rules for the EV tax credit in last year’s Inflation Reduction Act (IRA).
This is the biggest piece of outstanding guidance for the $7,500 customer incentive (aka 30D) and outlines how automakers will account for the value and origin of the critical minerals and components in EV batteries.
Before I dig into all that… first, some good news: EV sales had a record run in 2022.
Market share continues to rise: 8.5 percent in Q4 and 10 percent in December. There is momentum and product excitement. Automakers are introducing more EVs every month – across all segments and price points. Consumers will be able to choose from 150 EV models by 2026.
EV and battery manufacturing is also ramping up in the U.S. Supply chains are localizing and allies are talking about specialized mineral trade agreements (more on that below). That’s going to have an impact over the long term and help achieve our shared goal: domestic EV supply chains that can support this 100-year change in the industrial base and reduce U.S. reliance on foreign countries.
Questions I’m asked each time Treasury issues new rules: Which EVs – make and model – now qualify for the tax credit… and which don’t? What’s in or out? Where is the website with the list?
Short answer: I don’t know. It’s not a question that can be answered today. Automakers will report directly to the IRS which EV models (effective April 18) meet the critical mineral and/or battery component requirements.
Here’s what I can say: this latest turn will further reduce the number of eligible EVs. Fewer vehicles (and fewer customers) will qualify for the full $7,500 credit in the near term.
In fact, this period may go down as the highwater mark for EV tax credit eligibility since the IRA passed last year.
