One of the biggest news stories of the last two years in the automotive world was the surprise passage of the Inflation Reduction Act, which offers up to $7,500 off of qualifying electric vehicles for individuals or families assuming the vehicles meet certain requirements. The actual implementation of the law has raised all sorts of questions and, finally, we have a full list of the electric cars and trucks that currently qualify for the discount.
While a tax credit existed before the new one, it limited the number of vehicles per manufacturer, and many companies had exhausted those credits. This new law widened it and, even better, one of the changes in the rules is that, as of this year, qualifying dealers and sellers will allow you to claim the $7,500 (or $3,750) tax credit at what the Treasury Department calls point-of-sale (POS). This means that, rather than waiting to claim a tax credit on your income tax filing, the dealer or company can take the full amount off immediately from the sales price. This is a great feature for consumers and, while not all dealers are capable of doing this, Automotive News reported that at least 7,000 of about 17,000 registered dealers were already approved, with more in the pipeline.
It’s going to take some time to find out how many dealers, in total, are signed up, but it’s safe to assume that if a dealer or manufacturer does a significant volume of electric vehicles they’ll be in the system. Still, it’s worth checking if you’re in the market for a car right now.
So, which vehicles made it this year? Each year the requirements for these vehicles get more difficult to fulfill as the goal is to shift the reliance on Chinese-sourced materials toward friendlier sources while also building up America’s ability to produce electric vehicles.
Specifically, the battery in the vehicle can’t come from a “foreign entity of concern,” although some of the critical materials in the battery can still come from foreign entities of concern in 2024. This year, vehicles must have at least 50% of their critical materials from the United States or a trading partner, this goes up by ten percentage points each year. For battery components, at least 60% of the value of the battery components must be manufactured or assembled in North America this year and next. Here’s a handy chart from the Treasury Department:
As with previous years, both the amount of money the vehicle costs and the amount of money you make apply to determining whether or not you qualify.
As for what you make, here’s the Treasury Department guidance, which applies to individuals (businesses have different rules):
To qualify, you must:
Buy it for your own use, not for resale
Use it primarily in the U.S.
In addition, your modified adjusted gross income (AGI) may not exceed:$300,000 for married couples filing jointly
$225,000 for heads of households
$150,000 for all other filers
You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in 1 of the two years, you can claim the credit.
It’s a little more straightforward for the vehicle cost, with the limits being:
- $80,000 for vans, sport utility vehicles and pickup trucks
- $55,000 for everything else
That theoretically means that a lot of vehicles qualify, though fewer to start this year than last year.
The Full List Of Qualifying Electric Vehicles
The FuelEconomy.gov list is out, let’s see which models made the cut. We’ll start with cars from Stellantis, Ford, and General Motors:
There are not a lot of surprises here. The only vehicles that currently qualify for the full tax credit are the Standard and Extended Range Ford F-150 Lightning and Chevy Bolt, which is going out of production and not coming back until at least 2025, as well as the Chrysler Pacifica PHEV. The Escape Plug-In, Lincoln Corsair, Wrangler 4xe, and Grand Cherokee 4xe, continue to qualify for the $3,750 partial tax credit.
Notably not on this list are the Chevy Blazer EV and Cadillac Lyriq, however, GM says that both vehicles are only being disqualified because of a couple of minor components and those will be swapped out as soon as possible and the company expects to re-qualify early this year.
Also gone is the Ford E-Transit, which is the only van that was on the list last year.
What about Tesla and Rivian? See the chart below.
As expected, The Rivian vehicles under the appropriate MSRP allotment will qualify for the $3,750 partial credit. The Model 3 Performance maintains the tax credit as does the Model X Long Range, which had its price dropped last year seemingly to qualify for the tax credit. The Model Y AWD, Performance, and RWD range all qualify as well.
The Model 3 qualification is interesting and brings up a strange scenario if you qualify, as pointed out by Tesla investor/hype-man Sawyer Merritt:
Welp, because the Model 3 LR (and RWD) has officially lost eligibility for the $7,500 Fed EV rebate, the Model 3 Performance (including Fed rebate) is now cheaper than the Model 3 Long Range.
• Model 3 Performance: $43,490 (eligible)
• Model 3 LR: $45,990 (not eligible) pic.twitter.com/Z4KOxYUsDN— Sawyer Merritt (@SawyerMerritt) January 1, 2024
That’s amusing, though it’s a small price difference so consumers can ask themselves if they’d rather have the extra 20 or so miles of range or a car that’s much faster to 60 mph than the Long Range Model 3, which is already quite fast to 60 mph. Honestly, I think I’d still go Long Range here.
Foreign automakers are racing to build battery plants and facilities here in the United States so consumers should start seeing more cars qualify in 2025 and 2026.
What If The EV You Want Isn’t Here?
There’s a giant loophole in the law that makes the $7,500 full EV tax credit applicable to a commercial vehicle, regardless of how much it costs, where it’s built, or how much income you have.
The quirk here is that you can get this full credit, typically, on a vehicle that’s leased. Why? Because the Treasury Department says the vehicle is owned by the leasing company, that company can pass the $7,500 onto you. In fact, pretty much every company selling an electric car in the United States has these deals:
That’s a lease for an Ioniq 6 SE at $349 a month with $4,999 down. The $7,500 is applied to the lease, thus bringing down the monthly price.
Expect this list to be updated throughout the year as more vehicles start to qualify.
Can anyone explain why the Model 3 RWD or LR don’t qualify but the Performance does?
This is great! But please, please do one for the credit for Used electric vehicles, which is vastly more applicable to the majority of the Autopian audience. I guess those dealers have to ‘register’ too? Are Copart/IAAI registered? I think the income credits are too low for it to be useful by most people, but, there are still some of us who it applies to, and there’s very little information out there about it.
What’s the reason Kia and Hyundai aren’t on this list, again?
Last I checked, their EVs are built in Korea. They are building battery plants in the US and converting a plant to build EVs in the US but that’s not yet complete. Per the article: “For battery components, at least 60% of the value of the battery components must be manufactured or assembled in North America this year and next. ” This gets stricter each year, btw.
What the heck is the “and next” mean? If they shift production back to Korea the year after is IRS going to come asking you for that $7500 back?
It means if you buy another one the following year, the manufacturer is less likely to be certified to qualify for the credit. It does nothing to vehicles you’ve already bought and cashed in on previous years.
It’s kinda nuts that KIA/Hyundai let this slide. A $7500 price adjustment on the bottom line on day of purchase is a gamechanger. This has to affect sales in a big way. And Hyundai made a HUGE commitment with the IONIQ5 series which will now probably just sit unsold.
They did fight it last year but lost. If you really want an Ioniq 5 or 6, both cars I would be looking at as finalists if I was buying an EV today, 2023 models have $7,500 from Hyundai on the hood and a local dealer has another $2,000 on the hood in addition. The 2024 models have slightly a cheaper MSRP but “only” get $5,000 off on the Ioniq 5 only (no deals on 6 that I see) from Hyundai but same dealer still offering $2,000 off of some. Add in another $3,500 here in MA, not horrible. I have driven the 5 and 6, very limited, and have sat in the 3 and Y, as well has been a squished passenger in the back of a 3 as an Uber. The 5/6 fit my 6’4″ self and passengers much better and don’t have the highly annoying, non-adjustable headrest that the Tesla models have.
hyundai did not let it slide they lobbied to get the laws changed. this is a very recent change. building a factory takes a long amount of time. picking a location takes over a year and then permitting takes months and months before you even get to break ground.
It’s fine. They are building US plants, which is what the US wants. The Koreans will get their money, the US gets what we want. There’s not too much to complain about really. The cars themselves are good as others have noted. Better real world range than comparable Teslas.
Dealership = a POS at the POS selling a POS
This is why I can’t be an auto journalist, I loathe dealerships, and the products being offered by the mainstream manufacturers that have bought into Melon’s dystopian vision of drivers will soon be supplanted, and the future is autonomy and data collection monetization.
If tax dollars are to be spent to encourage electrification, and environmental improvement, let them go to the small business EV converters, and manufacturers of conversion kits.
So you can buy a big fat SUV with a giant resource sucking battery for $80,000 and get a check from your fellow taxpayers? But if you want a modest $40,000 low-end efficient Tesla Model 3, sorry, no rebate.
It’s almost as if GM and Ford were helping to write the legislation.
its not a check from your taxpayer it is a discount on the taxes you owe. I agree that the cap on the price should be the same no matter if you pick a car or suv.
I find the income and vehicle price limits problematic. It seems like the government is encouraging people to buy vehicles they cannot afford. A single person making $149,000 has a great income, but is it a good idea for that person to buy an $80,000 EV even with a $7500 tax credit? Americans already spend too much of their incomes on vehicles, and that has created a situation where manufacturers only sell expensive vehicles because that is what consumers are buying. It seems ridiculous to encourage this behavior with tax incentives for expensive EVs.
Also, the income limits seem low to me if the goal is to increase EV adoption to address climate change. Again, $150,000 for a single person is a great income, but it is not so high that $7500 is a trivial amount of money (particularly if you live in an expensive part of the country or have other debts to pay off). If you don’t qualify for the tax credit, you are effectively taking an immediate depreciation hit of $7500 since used car values are based on what the vehicles cost when purchased by a typical buyer. New vehicles are notorious for immediate depreciation, but not qualifying for the tax credit makes a buyer susceptible to typical new car depreciation as well as an additional $7500 in depreciation for the credit they are not receiving. This strikes me as a disincentive for buyers who exceed the income limits but are not so wealthy that money is no object. The lease loophole helps, but it would be better to make that credit available to more buyers if the goal is to replace ICE vehicles with EVs.
Overall, I don’t mind the EV tax credit, but it seems like it is implemented very poorly.
It was implemented with a given purpose. It’s just that the purpose for which it was implemented is not the same as the stated purpose of the legislation which was made to the public. The legislation was written by corporate lobbyists for their employers.
Your statement on what it seems like is exactly what is going on.
This entire tax credit is a boondoggle. This makes it part of a fairly normal piece of legislation as far as that goes, because this entire society has been converted into a series of boondoggles, scams, and extortions of one type or another.
If the Chinese can profitably sell a $14k BYD Seagull with a 150+ mile range on U.S. highways(claimed 249 mile range on the Chinese driving cycle), then surely GM could profitably sell a $20k sedan with a 200 mile range on U.S. highways.
The problem is that the will on part of the manufacturers is not there. A $20k EV sedan with 200 miles range sold with a $2k profit margin means there is a $35k CUV with a 250 mile range and double the battery/materials not sold leaving a $10k profit margin unaccumulated. Then of course, there is the fact that GM makes more money financing its cars than actually selling its cars, which means they WANT you in more debt paying more in interest to them.
It’s a positive feedback loop encouraging ever larger, more extravagant, and expensive vehicles. So much so that working class and lower middle class people have basically been priced out of the new car market altogether, and nearly the entirety of the new car market is now being driven by the upper 20% who are more concerned about perpetuating conspicuous consumption via impressing people with their car’s features than on more practical criteria such as operating cost, energy efficiency, or reparability. People of average financial means have to make due with the used vehicles from this market, rather than having anything tailored to their needs available at all. Note the low depreciation rate and high demand for used Toyota Prius, Camrys, and Corollas, used Honda Civics and Accords, used Nissan Altimas, and used Tesla Model 3s to get an idea of what truly matters to most car users.
The other piece is that the battery content and mineral requirements are counter-productively aggressive. There should have been no lease loophole, but the requirements should have started phasing in 1-2 years later than they did. The rest of the schedule could have stayed aggressive, but I believe having aggressive but attainable timeline is more effective then forcing catch-up which more manufacturers may eschew since they are already seeing the effects of the reduced credit and my realize they don’t care.
I tend to attribute bad legislation to benign ineptitude instead of a conspiracy (aka lobbying), but it is hard to ignore how much the manufacturers are profiting off the obvious flaws of this legislation. That can’t be unintentional.
I remain skeptical that a cheap EV would be popular with Americans who are accustomed to taking out long loans to buy luxury vehicles, but I would still like to see what the manufacturers could come up with if the right incentives were in place. The resale value of Camrys, Civis, et al. does suggest that there is at least a relatively large market for practical vehicles for the middle class, so maybe a cheap EV would be popular?
Not just a cheap EV. We have those on the used market with slightly worn out batteries and less than 100 miles range and generally no fast charger compatibility. They don’t seem to sell well and the depreciation tells the story.
But a cheap EV with decent range that it still compatible with fast charging infrastructure and can be used for long distance travel. I think 200 miles highway range would be the lowest acceptable amount for mass acceptance. It’s close enough to an ICE car from a practical standpoint when it comes to long distance travel(which is typically done on highways), while city range can be a lot lower for someone who can plug it in every day without compromising its usability. The sort of efficiency required is inexpensively achievable through aerodynamic drag reduction techniques that have been known for a century, and would allow a sedan to get a 200+ mile highway range on a battery pack sized appropriately for a typically short-ranged “city car”.
Appropriately designed, a 5-seater sedan long enough for all occupants to fully stretch their legs out with comfort comparable to a W123 Mercedes, with a dirt cheap price tag and at least 200 miles highway range, shouldn’t need more than a 30 kWh battery pack. This is roughly the battery size needed to keep the cost below the $20k price point with U.S. labor costs used.
Honestly, if a $20k EV with a 200 mile highway range was realistic, that would be great. I have always been under the impression that a vehicle like that is not feasible based on today’s technology, but I don’t have any background in engineering so I am not particularly knowledgeable on the subject. I absolutely would buy a $20k EV with a 200 mile highway range.
It was probably feasible 25 years ago, at least in nominal dollars. Look up the Solectria Sunrise. The designer, James Worden, claimed a $20,000 MSRP if mass produced in 1998. It had a real-world 200 mile range at freeway speeds on a 26 kWh NiMH battery pack(those batteries were about 1/4 as energy denseby mass as today’s Li Ion and 1/3 as energy dense as today’s LiFePO4). Hypermiled in the Tour De Sol, it set a world record at the time of 373 miles on one charge.
It was able to do this through aerodynamic drag reduction and mass reduction. The completed car had a drag coefficient of 0.17 and weighed 2,600 lbs.
It was made of exotic materials and with exotic build processes, however, but the aerodynamics are where it got most of its range, and if made with conventional materials and processes, it still could have weighed under 3,000 lbs. It also was a compact car instead of a midsized sedan, but a midsized sedan would have an even easier time getting the requisite low drag coefficient due to the extra length with which to taper the car.
A modern form factor like the Mercedes Vision EQXX concept could be used as a basis for such a car and still pass FMVSS. This Vision EQXX concept also had a 0.17 Cd value.
If the car is kept with minimal complexity and features, given that a modern Honda Accord loaded with crap is around 3,200 lbs, I think a sub 3,000 lb weight without exotic materials, passing FMVSS, and keeping the low drag, with a 30 kWh LiFePO4 battery on board, is possible, and is certainly doable for around $20k MSRP with a $1-2k profit margin per unit, provided enough units can be sold. You’d be looking at an EV that consumed maybe 130 Wh/mile at a steady 70 mph, and 220-ish Wh/mile in the city with lots of stop and go driving.
that car exists its the bolt ev 269 mile range and 19k after the tax credit. ( asuming you owe that much in taxes)
The Chevy Bolt has a 60 kWh battery pack – twice the capacity of your proposed 30 kWh pack – and even so it cannot travel 200 miles at 75 mph (highway speed). My wife leased two Bolts (a 2017 and a 2020) and I know from personal experience what they can do. How is a proposed 5-seater with a 30 kWh pack supposed to achieve 200 miles of highway range?
How? Load reduction.
The Bolt is heavy. It weighs 3,598 lbs, nearly 400 lbs more than a Honda Accord.
Aerodynamically, the Chevrolet Bolt is also a bit of a pig as far as electric cars go. It has a frontal area of roughly 2.4 m^2 and a drag coefficient of 0.31. This is a CdA value of 0.74 m^2. There are crossovers and SUVs that do significantly better on this front.
With these traits, the Bolt needs 292 Wh/mile to hold 70 mph. I’m using 70 mph because this is what data exists for it on the InsideEVs website giving us a real-world datapoint.
What we need is a car that is more aerodynamically slippery regarding drag coefficient, and also slightly more narrow, and slightly lower to get the frontal area down. For a car to have passenger space comparable to an old W123 Mercedes, a frontal area of about 2.1 m^2 is doable. A drag coefficient of about 0.17 is achievable in sedan form, shown in cars like the 1996 Solectria Sunrise(0.17 Cd), 2000 GM Precept(0.16 Cd), 1985 Ford Probe V(0.137 Cd), 2020 GAC Eno.146(0.146 Cd), among others.
A Cd value of 0.17 and a frontal area of 2.1 m^2 gives us a CdA value of 0.36 m^2, half that of the Chevrolet Bolt. In turn, this will yield an energy consumption of roughly half of that of the Bolt at highway speeds.
Cutting the battery in half will also allow hundreds of pounds of weight savings, in addition to the hundreds of pounds of weight savings from not only shrinking the size of the car slightly, but ALSO reducing the amount of features that come standard. These changes will also reduce the cost to build the car, significantly. It should be possible to get such a car with a 30 kWh battery somewhere around or slightly below 3,000 lbs.
For a real-world example of something close to what I propose, the Mercedes Benz Vision EQXX needed roughly 160 Wh/mile to hold 70 mph. It had a frontal area of about 2.1 m^2 and a drag coefficient of 0.17, with the car weighing in at around 3,900 lbs while lugging around a massive 100 kWh battery while loaded with all kinds of mass-adding energy-sucking bells and whistles. The EQXX is a luxury car, and not something intended for the masses.
In light of this, I think 150 Wh/mile out of an economical midsized 5-seater car for the plebes is very doable. This sort of efficiency would get that 200 mile range on half a Bolt’s battery.
There’s a real-world example of a GM product getting that sort of efficiency as well: the GM EV1. 0.19 drag coefficient, 1.9 m^2 frontal area, and a curb weight of roughly 2,900 lbs. While it was a 2-seater, a 4-seater prototype of the EV1 was showcased, but I’m not sure it was ever tested.
Even better is possible, because a 0.17 Cd value I proposed is not the lowest that it can go. If you go to unconventional forms, for a practical road going vehicle, it’s possible to go into the low 0.1X range. The Aptera, which seats two, has a 0.13 Cd, and that is with the penalty of outboard wheels(albeit fared) and exposed axles. I mentioned 4 sedans earlier in this post that went lower than 0.17. The Stella solar car concept got a 0.11, and that actually seats 4, but it looks very unconventional.
Who would buy such a car? Is it possible to comfortably fit 5 American adults into a car that is narrower than a Bolt? Here’s what I mean: The front seat of the 2023 Bolt EV has 54.6″ shoulder room, 51.3″ hip room and 44.3″ leg room per the Chevrolet website. I happen to have a 2013 Fiat 500 around the house at the moment which might make for a useful passenger room comparison: 49.4″ shoulder room, 47.9″ hip room, and 40.7″ leg room. Having driven both, I think that you would have a hard time selling a car with the Fiat 500’s interior dimensions to the average American. I kinda like the 500, but it’s really narrow…and I’m chubby.
More attention would be paid on height reduction than width reduction to pull this off. The Bolt is a tall car, at 63.5″. That could certainly be cut to the same as say, somewhere around 56 inches, matching a W123 Mercedes or a modern Honda Accord, chopping off more than 10% of frontal area in the process. That 2.1 m^2 frontal area could be achieved with a total vehicle width around 70″, about the same as a W123 Mercedes, or a Chevrolet Bolt… so it may not even need to be narrowed at all.
The main focus of course would be on drag coefficient reduction by going to a significantly more slippery shape and saying “screw it” to all the modern corporate styling trends that go against this.
They could, but GM needs to look out for their shareholders. That’s who’s #1 on their eyes.
“ because this entire society has been converted into a series of boondoggles, scams, and extortions of one type or another.”
This is a truly brilliant observation. As the administrative, bureaucratic state continues its ever enlarging march, it honestly feels like you need a lawyer to do almost anything. There is just so little room left for things to be straightforward, which just makes society feel like that series of boondoggles, scams, and extortions. Matthew Crawford wrote interestingly on this while approaching the California smog system in a recent essay, equating it to being in a developing economy where you “have to know a guy” to actually get anything done.
Here’s actually a great line from one of Crawfords other recent piece, discussing how the hell a tail light repair of an F150 could cost $5,900 –
“Perhaps complexity also helps account for the dysfunction we see in institutions, both public and private, in which layers of management intervene between any goal and its realization.”
In short, capitalism is a failure.
I don’t know, $150k seems like a high income to me, it’s almost 2.5 times my entire household income. Perhaps a tier system would be better.
A tiered system is a great idea, but I do think the income limits need to be higher. I am basing this on conversations I have had with higher income individuals who are in the market for a new car. I have talked to several people who were interested in an EV until they found out they were not eligible for the credit. It is probably more of a psychological thing than a financial thing, but it appears a non-trivial amount of higher income buyers are avoiding EVs because they do not get the credit.
Again, if the goal is to replace ICE vehicles with EVs to fight climate change, it seems counterproductive to put restrictions in place that lead a subset of buyers to chose an ICE vehicle when they otherwise would have purchased an EV.
It is the politicians trying to pick a number that doesn’t sound “rich”. You already see the comments here.
When I lived in Upstate NY, $150/300k a year would be a very comfortable income with plenty to spare. Take that income to a major coastal city and its suburbs, and you are just a regular middle class household that might not even be able to afford a single family house.
Agree on the 150/300K seeming high.
Depends where you live, I guess. In some parts of RI you’d be doing ok, in CA or NYC you’d be broke.
Interesting take on the depreciation. I think the principle we should all remember is “don’t let the perfect be the enemy of the good.” There are many points that can be argued are suboptimal, but overall the credits will increase EV (both BEV and PHEV) adoption and bring more production to the US and it’s preferred trading partners.
The income requirements, and other ways that our government view income, as a whole is problematic. $300k in a state like California much different than a place like Louisiana.
Our govt just LOVES means testing anything that directly benefits citizens/consumers, while making it rain anytime it comes to corporate welfare.
The sourcing requirements are new, but the alternative fuel tax credit itself is a holdover from the George W. Bush administration, which explains a lot.
“I find the income and vehicle price limits problematic. It seems like the government is encouraging people to buy vehicles they cannot afford.”
Our entire economy is based on people spending money they don’t have, so this tracks.
The price cutoff should have been $35,000 if we want to incentivize production of cars the average person can AFFORD.
Paying $7500 people who can afford a $55k car is a waste of tax dollars.
I proposed earlier on this site last year that the cutoff should be $20,000 MSRP.
This way, the manufacturers are forced to focus on load reduction to keep battery costs down for acceptable range, while the margins are so narrow to meet the $20k price point that it becomes next to impossible for the maker to raise the price enough to take advantage of the tax credit by padding the profit margins to match the tax credit. And of course, with the car being advertised as $20k MSRP, when dealerships try to charge $27,500, almost everyone is going to know to walk away.
If GM re-designed the Bolt with half the battery size and roughly the same aerodynamic drag of its EV1, they could certainly have met this while having a car with an honest 150-200 mile range.
Screw these greedy leeches. They deserve to go bankrupt.
As the legacy car makers can’t seem to make a profit on ev’s at any price, I think the “credit” for these subsidies can go to companies like Rio Tinto, who stand to make billions in the mining of battery and infrastructure components.
Regardless of the party label, our government is “for sale”.
With today’s regulatory climate, selling ANY car in the U.S. will not be profitable until years after production. Tesla was not initially profitable, and without government money, would probably have gone under. Any new model of mass market car sold is at least a $1 billion endeavor from start to finish.
The legacy automakers will show a profit if they sell their EVs for years to enough people to recoup their non-recurring engineering costs, tooling/factory costs, ect. Just like they would any other car. And like any other car, they will show immediate losses at the start of production because they haven’t yet recouped that $1+ billion to develop that model of vehicle.
Focusing on expensive trucks/SUVs/CUVs has put the automakers in a position where they MUST sell them, to a buying public that mostly can’t afford them. The demographic that wants to flash their wealth around, whether it’s real wealth or debt, isn’t interested in EVs for the EVs greatest strength: the ability to save the operator money vs using gasoline and to reduce ecological footprint. And the vehicles are being built to cater to people who aren’t really out to save money or the planet. Thus, EV efforts from the legacy manufacturers are mostly going to backfire, spectacularly.
Never thought about a $20k MSRP limit but wow that would go a long way to push smaller vehicles, conserve resources, etc. When that $20k car is now a $12.5k car, that would really do a lot to spur sales and get older polluting cars off the road.
And even though an EV doesn’t make sense for my family’s driving patterns, an EV costing ~$13k could change that.
The idea is also such that your working class Joe Sixpack driving a $5,000 15-year-old clunker ICE could buy a usable EV brand-new with a warrantee longer than the duration of payments, such that the monthly payment is less than the amount of money saved by not using gasoline and not needing constant upkeep and maintenance.
The incentive wasn’t designed to encourage affordable EVs. The incentive is moderately intended to help EV adoption (where someone paying $40k+ for a car from the right manufacturer might now instead get an EV), but mostly it’s to boost domestic manufacturing. Which was apparently necessary to get the legislative body to pass it.
Question: If you ignore the who EV VS ICE debate for a second doesn’t this incentivize automakers to make expensive vehicles instead of cheaper ones?
Right now the most pressing issue when it comes to car costs is the massive amount of defaults on auto loans and how 95%+ of all new cars require some sort of financing to acquire. I don’t see how this is in any way sustainable.
If this keeps up I fear there will be a ton of bailouts for US automakers and a bunch of protectionist measures similar to the chicken tax and the footprint rule put into place.
I’ll be out of the new mass produced automobile market by 2028 at the latest due to the mandatory self driving regs that can kick in at the earliest by November of 2024 but no later than 2028. Congressmen tried to defund the act but they lost by a massive majority so it’s almost certainly going into effect. So while massive automakers going bankrupt wouldn’t affect me much directly it’s still very concerning.
Considering the influence that the domestic manufacturers have on the government and the fact that corporate lobbyists write the laws that are passed(and which we are expected to follow), I think that was the entire idea. The two-tiered system with one price limit for cars and other for trucks/SUVs couldn’t spell it out any more clearly.
Probably
The two tiered system is absolutely bonkers. They already have the permissive rules for business purchases. No one “needs” a truck or SUV or Van that costs more than $55k if they don’t have a legitimate venture. The only exception I can think of is a big family that needs a full-size van but even then it should be doable under $55k.
Also, having limits for price and income that are just hard numbers and not tied to some kind of index so that they don’t become completely out of step with reality in the future is a huge oversight with most laws in general. Just look at minimum wage or even the dollar thresholds for many crimes. In most states theft of something worth over $300 or $500 is a felony because the laws were put on the books when that was the equivalent of stealing a car.
*I meant to say ‘whole EV VS ICE debate….’
Well, if the manufacturer raises the MSRP by the tax credit amount and pockets the difference (which I believe is the intended effect), then a $70,000 SUV goes from having 20% profit margin to 31%. But a $21,000 car could go from 0% profit margin to 36%. On paper, the tax credit should incentivise cheaper cars.
Unfortunately, an individual needs to earn $69,400 (top 30%) to take full advantage of the tax credit. For a family of 4, they need to earn $124,000 (top 25%). The people in this bracket are generally inclined towards luxury and conspicuous consumption, and the people below this bracket were buying used anyway, so a $70,000 SUV is likely to sell better than a $21,000 economy car.
Manufacturers (of all sorts, not just cars) are increasingly catering towards those top incomes, because thanks to income inequality, the top 20(ish)% have more money to spend than the bottom 80% combined. Ever notice how iPhones used to cost $200 and now cost $1,100?
2024 still doesn’t seem like the best year to buy an EV. Still a good year but not the best. That will be 2025 or 2026 when this point of sale credit gets fully figured out and more vehicles are eligible for it.
My worry is that dealers will act dishonestly and play funny business with the point of sale tax credit to pad their margins. $30k EV? Dealer— Actually, now it’s a $34k EV due to our market adjustment buuuuut we can offer $7500 off if you sign today. And so forth.
Some of the shadier dealers sure will. Until they’re outed and start losing business because of their slimy practices.
Not all dealers are scummy. Find one and give them the business.
You KNOW they will do that crap. The question is, what are they going to do when all of the buyers dry up? Most people are having difficulties affording the basic necessities, and this coupled with the current interest rates and credit requirements, is going to increasingly limit the number of potential customers. Meanwhile, dealership lots where I live continue to flood with unsold inventory and hardly anyone on the lots.
Prediction: we will within 2 years get ANOTHER “cash for clunkers” type legislation coupled with hundreds of billions of dollars of taxpayer-funded bailouts for the auto industry. And the same tired old trend of increasingly oversized, expensive, feature-laden vehicles will continue. Then the unions will get unjustifiably blamed for it while the Chinese auto industry either steps in and takes over or is legislated out of the U.S. and in either case, common working people in the U.S. become increasingly priced out of car ownership altogether.
If this comes to pass, I’m buying something very nice on the cheap without a loan.
> dealers will act dishonestly and play funny business with the point of sale tax credit to pad their margins
What, dealers? Never!