If you want to buy a new electric vehicle this year, the rest of this month is likely to be a confusing and stressful time.
Friday, the House will return from a respite and consider the Inflation Reduction Act (IRA), which includes about $370 billion in energy and climate investments. And while a big part of that is great news — setting up our supply chain to supply domestic batteries and more U.S.-made electric vehicles in the near future — the EV tax credit revamped to enhance the deal for car buyers that won’t work to seem sweet for a short time.
That’s because by the time President Biden signed the bill into law at the end of the month, the old version of the IRS tax code 30D was no longer in effect.
2022 Ford F-150 Lightning
The new law was drafted without a provision extending the “old” EV tax credit to all purchases for the remainder of the year. Meanwhile, the IRA law lays out regulations for key minerals, battery supplies, water content thresholds and vehicle assembly that the Treasury Department will need to determine before placing the “new” 30D in effect for tax year 2023.
ZETA, an advocacy and policy group representing electric vehicle manufacturers, charging networks, hardware suppliers, battery manufacturers, utilities and all industries that manufacture and support electric vehicles, does not consider this a quick change. Based on bill readings and conversations with administrators, it doesn’t expect the EV tax credit to be available to ordinary consumers until 2023, it confirmed. Green car report Thursday.
The team estimates that the time for the invoice on its way to the shopper’s President’s desk is about two weeks from today.
The tax credit will disappear for the rest of the year — maybe
Contrary to what has been reported elsewhere, there are no special provisions to apply retroactively to electric vehicle buyers for the remainder of 2022. Under the revised credits, certain categories Vehicles currently eligible for early credit will not be due to the new MSRP limits.
2023 Chevrolet Bolt EV
The IRA essentially killed off some markets this year so it can grow into the future—with the addition of a $4,000 line of credit for used electric vehicles (which cost up to $25,000). ), a tax credit of up to $40,000 for “clean commercial vehicles, and a substantial extension and extension of the retroactive period for the 30C credit will give households time to use a charging device.
As we mentioned, raising the limit — and extending the 30D tax credit through 2032—will remove the hat of 200,000 cars allowed for eligible vehicles from each vehicle manufacturer. That means Tesla and GM vehicles could be eligible, if they can comply with supply chain requirements.
Caught during the transition
But there’s an exception, called the Conversion Rule, which can help more people get credit—albeit in a way that could be a washout based on dealer reviews.
When the measure was introduced (on page 394) in the Conversion Rules, only taxpayers “prior to the date of enactment of this Act” had “purchased or entered into a binding written agreement to purchase, a new “electrical plug-ins that qualify for motor vehicle driving” and are put into service on or after the passage of the act may still claim the credit as defined before enactment.
That will depend on state regulations regarding the sale, which are somewhat different in terms of what is considered legally binding in the purchase of a vehicle. In most cases, if not all, a deposit is also considered a prepayment for final delivery of the vehicle as binding, but an advance deposit for stowage is not.
Get ready for a run
That could lead to out of stock in the next week or so, as electric vehicle shoppers rush to complete their purchases. For startups like Rivian, Lucid, or other EVs with long waiting lists, deposit holders can step up special vehicles and put the money down.
Rivian R1S
What will happen at the beginning of the new year, then, is not entirely clear. According to the Alliance for Automotive Innovation, another trade group that represents the vast majority of automakers selling vehicles in the U.S. market, about 70 percent of electric vehicles currently sold in the United States will no longer qualify. claim the repair credit during this period. -in sourcing inquiries.
“A $7,500 line of credit may exist on paper, but no vehicle will qualify for this purchase offer for the next several years,” Alliance CEO John Bozella argued in an interview. recent meeting blog post. “That will be a major obstacle to our overall goal of 40-50% of EV sales by 2030.”
The union has argued that credit requires this supply chain transformation faster than could be possible. “Once again, we share the goal of increasing capacity and domestic supply, but the requirements must be the driving force behind changing the industrial base — not unattainable and punishable,” said Bozella. penalties for consumers.
2022 Kia EV6
That’s all a moot point now. It is practically unlikely that the bill will be significantly altered. Expanding the Transition Rule or making any date changes on the bill would likely require another vote. That’s what Senate Majority Leader Schumer, who worked hard for, Sens votes. Manchin and Sinema, will probably be avoided at all costs — because of continued opposition from Republicans to the bill, though bipartisan support for such measures in the poll.
The point of sale comes after a year
The bill also adds maximum household income and maximum MSRP requirements for tax credit eligibility. And it offers an extra year to apply point-of-sale details, setting up a “credit transfer” to begin with vehicles put into service after December 31, 2023 that will allow shoppers to claim it’s at the dealer, with the agent as an intermediary.
The 2022 Tesla Series (Courtesy of Tesla, Inc.)
This would be a more convenient credit, available to a wider public of electric vehicle buyers, if you consider Tesla Model Y and Model 3 buyers—more than half of the U.S. electric vehicle market—again. eligible. But it will require marketing to be rewritten, car buying advice to be rewritten, and for some automakers, entire business plans to be changed.
.@Ford statement of support #InflationReductionAct
While not all of the consumer tax credit targets for electric vehicles can be achieved overnight, this measure is an important step towards meeting common national climate goals. our nation and help boost jobs in American manufacturing. pic.twitter.com/NQFYCovdpC
– Melissa Miller (@Meliss1001) August 11, 2022
No company has yet released a comprehensive statement on where this makes the EV tax credit for the rest of the year. Ford welcomed the bill today as it entered the House, so Green car report contacted about how they see credit working from this point forward.
There’s only one way to clarify
The tax credit — and the peace of mind about whether shoppers can claim it — likely won’t return until the Treasury Department confirms that the vehicles will be deemed eligible. no, early next year. ZETA suggests that guidance could be released earlier, but that is unlikely as the bill shows domestic content and supply chain rules that go into effect immediately.
People will continue to buy electric vehicles through the end of the year — and perhaps, that could help some brands catch up with demand. But if you consider the record-setting moment this legislation inadvertently created, it’s going to be a very confusing moment for shoppers who have just decided to buy an electric vehicle.
