It’s a new year, which means it’s time for a new list of vehicles to get kicked from federal tax credit eligibility. Just like last year, EVs must be made in North America and have critical battery materials and at least 60 percent of their battery components sourced from “friendly” countries to qualify for the full $7,500 tax credit for EVs, but things just got tougher. For 2025, 60 percent of critical minerals must come from either U.S. soil or from countries America has free trade agreements with, up from 50 percent in 2025. This has the effect of shrinking the list of EVs and plug-in hybrids that qualify for tax credits, and here’s who’s losing out.
As of Jan. 1, no Volkswagen ID.4 variants are eligible for the $7,500 federal tax credit anymore, despite the battery electric crossover being built in Tennessee with battery packs coming from multiple suppliers. Considering the ID.4 is Volkswagen’s volume electrified model in America, this is a big one to lose tax credits on, even if the potential for supply chain adjustments means this could be momentary. At the same time, the Audi Q5 PHEV is losing its $3,750 tax credit, although considering a new Q5 is just around the corner, getting this model compliant with tax credit battery sourcing rules probably isn’t a huge concern.
You know what is a concern? How the disappearance of rebates may affect Stellantis. The Jeep Grand Cherokee 4xe and Jeep Wrangler 4xe both lose out on their $3,750 tax credits, and the Jeep brand isn’t in a great position to lose out on any money on the hoods of its vehicles. As the analysts at Cox Automotive reported, Jeep had new vehicle supply 51 percent greater than the industry average at the end of November, meaning its models are sitting on dealer lots longer than cars from almost any other manufacturer. Only Mini, Jaguar, and Lincoln models were in greater supply on the ground. In the wake of rebate disqualification, Bloomberg reports that Stellantis shares are down 3.8 percent in value, while Volkswagen shares dropped a less significant 1.4 percent.
On pretty much the other end of the automotive spectrum from an electrified Wrangler, there’s the Nissan Leaf. This electric hatchback was a pioneer in the EV space, but now it just doesn’t have a whole lot going for it. Not only is the current model seven years old, its base battery pack features a fairly outdated 151 miles of range, and no matter which battery size you choose, you’re stuck with the slow and increasingly hard-to-find CHAdeMO connector for DC fast charging. It’s safe to say that this EV largely trades on price, so losing a $3,750 tax credit makes this $29,280 EV even less appealing in the face of, say, a Tesla Model 3, which is only a few grand more expensive with the tax credit factored in but a whole lot more capable.
Oh, and a couple of Ford products also just lost their tax credit eligibility. I bet you forgot the Escape Plug-in Hybrid and its bougie cousin, the Lincoln Corsair Grand Touring existed. Well, these plug-in hybrid crossovers previously qualified for $3,750 in tax credits but now qualify for zilch. It’s worth noting that no other compact plug-in hybrid crossover currently qualifies for federal tax credits, so I guess the playing field’s level now for those looking to buy rather than lease.
So what now? Well, automakers looking to have their models qualify again for federal tax credits may want to tweak where their cells and minerals are coming from, then have the tweaked vehicles reassessed. Alternatively, it might be more sensible to push people towards leasing. After all, tax credit eligibility for leasing is substantially more generous than for purchases, and we’re staring down a lease return cliff. The supply of gently-used cars often relies on lease returns for consistency, so why not futureproof the second-hand market and encourage a bunch of these lease returns to be EVs?
(Photo credits: Jeep, Nissan, Volkswagen)
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I truthfully wasn’t aware that Jeep or Lincoln HAD any electric vehicles until this article.
Were these rules released as a surprise yesterday or something? Why wouldn’t manufacturers have gotten on this before the deadline? Seems kinda dumb.
Stellantis and VAG doing something dumb? Unpossible!
The leasing loophole is due to an executive branch interpretation of the law, meaning this does not need legislative branch action to be eliminated. It only takes an executive order signed by a sharpie.
Great. Now do it for every single vehicle.
On the flip side, Hyundai and Kia’s most popular EVs are now eligible for the $7,500 credit.
If the leasing loophole still exists, very few will care that the purchase discounts are NLA. If Trump eliminates those and manufacturers have to charge a real market price for EVs (and possibly lose money on them), the long cold electric winter will arrive.
We definitely need to end these rebates so we can shift that money to supporting the fossil fuel industry instead. So much more money to be had with that 100+ year old industry. Fuck the future and the fortunes it may reveal.
It’s all the same people.
Turtles, all the way down, including the ones that are underground and decomposing to make oil.
You’re both right.
In the modern economy, it’s actually Sub-Contractors All The Way Down
One of my favorite sayings. Also a fantastic song by Sturgill Simpson.
Nope. I NEVER knew it existed.
I read the Cyberbomb is still eligible for full credit.
ha ha, pstd in our vetrans and their suicide is fucking funny!! You are SO clever!!!
Back when I was in High School, we ran a pretend government for a week or two in Social Studies class. Each of us had to propose a law that we could vote on.
My proposed law was a law stating that no law or regulation could be more than a single paragraph or a single page (back then it was dot matrix printers, there wasn’t a 2 point option for printing).
It got shot down without debate with only one person voting for debate.
But I still think it’s a good idea. Each idea should be a law. Each law should be simple. If you have to twist arms with “I won’t vote for X unless I get Y”, then you vote on X and Y and if the people that agreed to vote for Y don’t vote for it, then you never vote for anything they want again.
Our EV credits were mixed into a Covid Recovery program that had a million other things in it and ended up long as hell and almost impossible to figure out. This has lead to this sort of BSery where the manufacturers can’t figure out how to make a car that gets full credits regularly and makes it so difficult for consumer’s to figure out that they are likely to decide to say F it and get an ICE vehicle instead.
“Back when I was in High School, we ran a pretend government for a week or two …”
What a coincidence, Congress still does that.
I think it’s safe to say in so many cases the kids learning about the government may know more than those elected at this point.
There’s how government is supposed to run, and how it actually is run. It’s not the people we elect that write the laws, it’s giant think tanks full of lawyers and consultants, mostly from major industry groups. And when a law is passed, it is nameless people that come up with rules and regulations and the like that actually change how we the people see things work.
My favorite example was the Paperwork Reduction Act of 1985(?) There’s now a 3 page checklist attached to every document that shows they considered it. That’s how to reduce paperwork. Add a checklist.
Wait, that sounds like what engineers do.
Are you saying we’re part of the problem too!?
If engineers ran the government.. it would be interesting. None of us use English as a first language and can’t write rules and instructions worth a damn. We would have to change all government documents to Excel Spreadsheets.
Which likely would be a lot more efficient.
Sorry, but every single OEM could have hired someone smart enough to figure this out, but they didn’t.
How? Nobody knows what it means. Imagine a room full of 535 drunks trying to write a document. Each person gets to say a word and the person next to them makes the next word to try to complete a sentence.
That’s how laws seem to be made. Only with more drinking and less thought.
I agree, but at the end of the day, the specs aren’t that complicated to follow. We are where we are today, everybody understands it now.
I do love your one paragraph or page rule!
Except that isn’t how it happens. Laws are written by other people, the lawmaker’s aides give them a synopsis and they vote on it largely depending on if their party supports it. No lawmaker reads them, it’s physically impossible.
Hell, it isn’t even a synopsis, it’s the title. “Save the Whales, Babies and Santa Act’ Yeah, voting for it. No idea of what the hell it actually says and does. Where’s my next Whisky Sour?
It’s really a fight for the title of a law today. You could make a law that tripled defense spending, setup Soylent green factories and if the title is the one listed above, congress would vote for it.
> a room full of 535 drunks
BMW HQ?
My proposed law was to eliminate HOV/HOT/whatever your state calls it lanes. Immediately shot down with no debate.
If you filled the HOV/HOT lane with a well-run train line that ran parallel to the major highways and had decent connecting hubs at each of the major highway exits, I’d vote for it.
I like it!
Of course. Then everyone else could take that and my commute wouldn’t be filled with traffic anymore.
When we did this in my high school, the only laws that made it to debate were lowering the legal drinking age to 12 and legalizing weed. My proposed law was additional driving tests and licenses based on vehicle size and weight, but that went down about as well as one would expect in a place like Texas.
Mine was to mandate spending something like $10 trillion to end world hunger. This was when every other commercial on TV was about an Ethiopian famine and Live Aid and all that was going on. It was 10 years later that we found out that 90% of the money and food that was supposed to go to the starving people got skimmed off by villains, but we had a lot of kids that actually believed that if they bought albums and voted for ending world hunger, that they could do it.
I remember those days. People couldn’t believe what seemed like a grift was actually a grift, though I suppose that is still a common issue today too.
Another classmate’s suggested law, which nearly made it to debate, was that all high schools should have a 1/4 mile dragway at the entry and exits to the parking lots. He had no justification for it beyond “Wouldn’t it be cool?!”
Just bought a used Escape PHEV last month, with the used Clean Car Tax Credit. had to get something because my main car was destroyed the day after Thanksgiving. Once I found out it was eligible, I made sure to get it last year in case something happened to the tax credit this year.
I had my car die again *. Got me thinking. I qualified for the used credit you use. Hopefully, I won’t soon. My company got bought out recently. The new company looked at our epic turnover rates (20%+ a year) and did a study. Per this study, we are underpaid based on local conditions by around 20-30%. Rumor is that they will fix that soon. If they don’t, maybe I should fix it myself for them.
* ended up being one of my brand new high quality coils crapped the bed in 4000 miles. The guy that fixed it put in a used coil for $75 and the car runs perfectly again. I don’t think I can find even a 1st Gen Leaf for $75.
Well, at least we can rest easy, knowing this tax credit experiment had its intended result, which was normalizing the pricing of EVs and PHEVs to the same level as ICE vehicles and definitely not just repeatedly padding the pockets of the wealthiest buyers, right?Any news on whether the used credit will continue? Or whether some version of the credit will continue for leases, for example? (the latter was a workaround after the last batch of restrictions)And no, I was not aware that the Escape had a Lincoln version until just now.
Lincoln: Nothing To See Here
Don’t understand this criticism as the credits were limited by income.
$300k AGI for a married couple (household) may not be in the 1%, but it is in the 5-6%. Quite a few sales reports have shown how many of the same people have claimed the credit repeatedly, as well — especially in the early days of Tesla adoption. I’m not a populist, but I do think the rollout was pretty weak. Of course, it only got stupider over time…like most tax programs
Is the point to sell as many EVs as possible to reduce emissions, or to be as progressive as possible? Not trying to be shitty about it, it’s a difficult problem.
The upper middle class people who make $150K-$300K as a household are squarely the target market for these vehicles, and most would not refer to them as “the wealthiest buyers”. If you want to reduce emissions faster, these are the people you need to target.
They do and did have the used vehicle credits for lower income people, limited the price of eligible EVs, etc as well.
Solid take, I was just taking the position that they needed to get EVs into as many households as possible…so eventually (what we see now) is more of them being purchased on the used market, so that’s a win. But IMO repeat buyers in the new market should have been capped, it needed to be “one and done” to help encourage more breadth of adoption. And the used credit is somewhat limiting on both income levels and the fact that it must be from a dealer and under $25k. I just think there’s a big gap between the two versions. It’s mostly water under the bridge now…I’m a lot more bullish (personally) on hybrids if we let the market really decide what most people need. But I’m also a Rivian investor, so…
The big turnaround for the used credit was the ability to sign the credit over to the dealer and have it applied to the down payment (started in 2024), which is exactly what I did when I bought my Escape PHEV last month.
Eh, by letting people use it multiple times (and realistically it’s only a credit of THEIR OWN tax obligation, if they less than the credit in taxes they didn’t get money back from elsewhere or someone else or the government directly), it generated more used cars faster which specifically did then enable those cars to get into others hands faster. If someone only got the tax credit once, then that person may well have decided to not get another car as soon as before, hence less used cars for others to buy as the person buying the used car may not be able to purchase it new.
If the new car EV tax credit were “one and done” then where would the supply of used EVs for the used car tax credit come from? My wife is on her 3rd leased EV since 2017 – certainly somebody is out there driving the two Chevy Bolts that she previously leased.
The income cap is too high for low cost of living states. Then you have people from high cost of living states complaining that they make just enough to be over the cap, arguing that they are not rich. Both are bad politically if the goal is to get citizens of the low cost of living states to vote for you.
I live in a low cost of living state and I can tell you that people making $300K are not the stereotypical “rich”, even here.
I would argue it matters more how voters in the $20k-$100k income range (the voter group that Trump won) feel about people who make at minimum 50% more than they do. Voters are not necessarily rational, and revenge or payback could be the motive. The goal of any legislation is to win votes; Anything else is secondary.
I guess it has. Now ICE cars are as expensive as EVs. Rivians R1Ts don’t look that bad in the world of $90k F150s.
That was the intent right? Make ICE prices go up to meet the EV prices.
“By any means necessary.” –Tesla Model X