President Biden signed the Inflation Reduction Act in August of last year. It had hundreds of pages with ideas on increasing the production of EVs and batteries in the US and changing the federal tax break for owning a plug-in vehicle. It led to a lot of confusion. The US Treasury released the final rules on March 31, which suggests that everything will change on April 18. On that day, only battery-electric and plug-in hybrid cars made in North America (the United States, Canada, or Mexico) with MSRPs under $55,000 for cars and $80,000 for SUVs and light trucks would be eligible for up to $7,500 in purchase incentives. Another problem is that China, which makes far more of these parts than any other country, is missing from the countries where certain materials and components for batteries can be obtained. The EPA has said it will update its list of allowed EVs on April 17, the day before the new rules take effect. Also, clients of commercial fleets who lease their EVs can still get real incentives, even though the above problems exist. CEO of the Alliance for Automotive Innovation, John Bozzella, says that the requirement that EVs be made in North America to qualify for tax credits got rid of 70% of the EV models on the market right now. It is starting to become evident, based on the locations of the factories producing electric vehicles that will be on the market in 2023, who will win the game of incentives and who will lose. This summarizes where we stand with retail customers one week before the new rules go into effect. The Winners Who Can’t Be Denied GMC, CADILLAC, and CHEVROLET General Motors have announced several contracts for sourcing minerals. It also plans to make all its future electric vehicles in North America. It has formed joint ventures with longtime cell partner LG Energy Solutions for at least three battery manufacturing facilities. In a statement to Car and Driver, the company said, “We anticipate that a number of our electric vehicles powered on the Ultium platform, such as the Cadillac Lyriq and other EVs that will be released this year, such as Chevrolet Equinox and Blazer EV SUVs, will be eligible for the maximum credit of $7,500 in 2023.” At the moment, only the Lyriq is being made, and only a few are. Matthew Ybarra, GM’s senior manager of public policy communication, says that future generations of the Chevy Silverado EV pickup truck sold for less than $80,000 will also be eligible. We still need to determine if the Chevy Bolt EV and EUV made in Michigan are eligible for the full $7500. According to Ybarra, even after the new rules are implemented on the 18th of April, both Bolts will still be eligible for some amount of credit. Lincoln FORD Ford said on Wednesday that all six plug-in cars it sells now would be eligible for at least some IRA credits. The entire $7500 goes to the Lincoln Aviator Grand Touring plug-in hybrid and the Ford F-150 Lightning EV pickup truck made in Detroit. The Ford Escape PHEV and the Lincoln Corsair Grand Touring, both made in Louisville, get $3750 because of where they are made or who makes their battery parts and puts them together. The e-Transit commercial van in Kansas City, the Mustang Mach-E in Mexico, and the Mustang Mach-E in Mexico will each get $3750. The Silicon Valley company TESLA has been in business for more than 20 years and has sold more than 4 million electric cars. It is the most prominent electric car maker in the United States. All four of its models and most battery packs are made in California, Nevada, and Texas. However, the Model S and Model X are more expensive than allowed because they are more extensive. Tesla doesn’t talk to the media, but it did say ten days ago that it expects the Model 3 with rear-wheel drive to get a minor tax credit, probably because its iron-phosphate battery is made in China. We won’t know until the final list of approved vehicles is released. Still, earlier this month, the company cut the prices of the Model S, Model X, Model Y, and Model 3 by $5,000, $2,000, and $1,000, respectively, possibly to make up for further cuts to incentives. The Genesis Electrified GV70 will go on sale this month. It is a battery-powered version of the popular GV70 compact crossover from the high-end Korean brand Genesis. Only that type is made in the Hyundai plant in Montgomery, Alabama. Jarred Pellat, the brand’s senior manager for PRP.R. and communications, said that Genesis is “analyzing what, if any, percentage of the EV tax credit the U.S.-built Electrified GV70 qualifies for after April 18.” North America makes the plug-in hybrid Chrysler Pacifica minivan, Jeep Wrangler 4xe, Grand Cherokee 4xe, and the STELLANTIS (Jeep, Ram, Dodge, Chrysler). Only $3750 will be given to the plug-in hybrid Jeeps, but the full $7500 will be given to the Pacifica. Because it would be made in Italy, the plug-in hybrid Dodge Hornet R/T is not eligible. Stellantis no longer sells cars that run on batteries in North America. Contenders HYUNDAI and KIA: Their US businesses will be hurt because all tax incentives end on April 18. They want to make a wide range of electric vehicles (EVs), and their most recent models have gotten good reviews. Yet, in May last year, the company said it would build a plant in Georgia that would only make EVs. Most likely, these plans have been moved up, and the first Hyundais and Kias made in the USU.S. may be able to get tax credits by the end of the following year. Nissan has made battery-electric Leaf hatchbacks in Smyrna, Tennessee, since 2013. In a nearby factory, battery cells are put together. Car & Driver says the company has yet to decide if the Leaf, which Ted Kreder says will be made until 2024, will be eligible for incentives. On the other hand, the company’s brand-new Ariya EV crossover will not be eligible. Volkswagen, AUDI, and other companies that make cars: The company in Tennessee started making the ID.4 small electric vehicle in July. But it is still figuring out whether it is eligible for incentives. A VW representative told Car & Driver, “We are carefully looking at the proposed guidance and talking to our partners in the supply chain to look at the Section 30D battery component and critical mineral criteria.” VW is in an excellent position for the long term. By 2030, its brands, which include Volkswagen, Audi, Bentley, and Lamborghini, will offer 25 different types of EVs in the USU.S. Last Monday, Pablo Di Si, the CEO of the Volkswagen Group of America, said on Bloomberg Television that all those people should get a maximum of $7500 in incentives. HONDA and ACURA: The Japanese automaker will start selling the Acura ZDX and Honda Prologue, two battery-electric SUVs, in 2024. Both cars will be made on GM’s Ultium platform in North America. According to what GMG.M. has said, both vehicles should be eligible for all the incentives. Will these businesses need to catch up? Several of these companies’ electric vehicles, like those made by Audi, BMW, and Mercedes-Benz, now cost more than the $55,000 and $80,000 price limits for passenger vehicles and SUVs, respectively. Also, cheaper cars like the Mercedes-Benz EQB SUV and the Audi Q4 e-tron have yet to be sold in North America. Business leases may be helpful for people who qualify, but the German luxury trio will have to wait until EVsE.V.s are made in North America to get one. Toyota and Lexus are two big car companies that need to be faster to make plug-in hybrid cars. Only the Toyota RAV4 Prime and Prius Prime plug-in hybrids sell in large numbers in the United States. Both were made in Japan (unlike all other RAV4s assembled in North America). The bZ4X crossover is made in Japan without any tax breaks. It was sold before it was recalled because the wheels could come off. Lexus only makes the NX450h+ plug-in hybrid outside of North America. In February, Toyota said it would build electric cars in a plant in Kentucky using batteries made in North Carolina. It plans to create 10,000 electric SUVs monthly by the end of 2025. By 2026, it wants to sell up to 200,000 EVs annually in the USU.S. Subaru: Its electric crossover, a Toyota bZ4X Solterra with a new name, must be certified because it was made in Japan. The new 2024 Crosstrek was just announced, but the company isn’t saying if it will have the plug-in hybrid Model available in the last generation. Still, Crosstrek production has recently moved from Japan to Indiana, so Subaru may be able to get credit for a Crosstrek PHEV made in the U.S. Keep watching. The MX-30 EV is now only sold in California, according to Mazda. Since the Little EV is made in Japan, it is not eligible for government subsidies. The PHEV is an option for the new CX-90 SUV made in Japan. Like Subaru, Nissan would probably get any new battery-electric technology from Toyota.
