The restriction of electric vehicles to certain manufacturers may limit consumer choice, as some popular brands could go out of business if they are not able to produce or sell electric cars. There is a contingent of consumers who prefer this type of limitation, citing concerns about the quality and safety of unknown brands.
Tesla has been struggling with meeting the demand for its Model 3, which was supposed to be their affordable electric car. The new requirements will go into effect Tuesday, and they’ll also cut credits for the Tesla Model 3 to $3,750. Other Tesla models will still be eligible for the full $7,500 credit. All General Motors EVs, including the Chevrolet Bolt and Bolt EUV, will also qualify for the full credit. This might help Tesla compete against other electric car manufacturers like General Motors who have been producing more affordable vehicles.
The EV tax credits were a major victory for the electric automobile industry, and have helped to spur sales of electric vehicles. The Inflation Reduction Act mandated that 50% of the value of battery components be produced or assembled in North America, in order to qualify for the $3,750 EV tax credit. This required manufacturers to source critical materials from within the United States or from countries with free trade agreements with the U.S.
The U.S. is looking to reduce its reliance on China for EV battery supplies, and hopes to do so by boosting its own capacity to control the supply chain. The goals of the rules are aimed at increasing American electric vehicle sales and decreasing Chinese domination in this field.
The move to put its guidance into effect this week follows the Environmental Protection Agency’s proposed harsh new emissions rules that would see 60% of new vehicle sales in 2030 being electric. The Treasury’s move could potentially help subsidize the cost of these expensive vehicles and limit Americans’ access to rival fuel sources.
The decline in the number of electric vehicles on the market is a trend that is likely to continue. The reasons for this are varied, but include concerns about range and charging times, as well as uncertainty about the future of subsidies and emissions regulations. This means that Electric Vehicle Owners (EVOs) will need to carefully consider which models are best suited for their needs before making a purchase.
Ford is making changes to the Ford EcoSport and Stellantis vehicles that will no longer qualify for the full tax credit. Instead, these vehicles will only have access to half of the available credit.
Some automakers are favoring battery plants in the U.S. over those in China, because the Chinese government is starting to stricter with emissions standards and some factories have already been shut down due to environmental concerns. Many of the battery cells that these automakers need are produced in China, but they would prefer to build their own facilities instead of relying on third-party manufacturers.
The increasing popularity of electric vehicles is no coincidence. The high cost and environmental impact of gasoline, combined with the growing concern about climate change, have led manufacturers to turn to alternative fuels. Electric cars are particularly suited for this market because they’re not only cheaper to operate than gas-powered vehicles, but also produce zero emissions.
EVs that don’t qualify for the $7,500 commercial leasing credit may be able to qualify for the $7,500 consumer tax credit. The Treasury has not yet released final guidelines on this issue, so carsmakers will need to contact the IRS to find out if their EVs are eligible.
