New Battery Sourcing Rules Slash Tax Credits For Popular Electric Vehicles, Says Report

New battery sourcing rules, effective Monday, disqualify electric vehicles like Nissan Leaf and Tesla Model 3 from up to $7,500 tax credits
An electric vehicle (EV) on charge
An electric vehicle (EV) on chargeGetty Images

New battery sourcing rules that came into effect on Monday resulted in the disqualification of several electric vehicles from tax credits of up to $7,500, as announced by the U.S. Treasury. Among the affected vehicles are the Nissan Leaf, Tesla Cybertruck All-Wheel Drive, certain Tesla Model 3s, and the Chevrolet Blazer EV, as per a report by Reuters.

In December, the Treasury released guidelines outlining new battery sourcing requirements with the goal of reducing dependence on China within the U.S. electric vehicle supply chain. The count of electric vehicle models eligible for U.S. EV tax credits has dropped from 43 to 19. The Treasury mentioned that certain manufacturers have not yet submitted information regarding eligible vehicles, potentially resulting in modifications to the list.

Under the new regulations, purchasers can now avail themselves of a tax credit, amounting to a maximum of $7,500, directly at a participating dealership during the point of sale. To qualify for this tax credit, specific limits on both the vehicle price and buyer income are established.

As per the report, Vehicles such as the Volkswagen ID.4, Tesla Model 3 Rear Wheel Drive, BMW X5 xDrive50e (BMWG.DE), Audi Q5 PHEV 55, Cadillac Lyriq, and Ford E-Transit have been removed from the list of vehicles eligible for tax credits.

The Treasury mentioned that automakers are now restructuring their supply chains to maintain eligibility for the new clean vehicle credit. Keeping in view the same, they are forming partnerships with allies, repatriating jobs, and increasing investments within the United States.

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