February 23, 2024



CNN
 — 

The Treasury Department has revealed which cars will be eligible for the new electric vehicle tax credits. Fewer models are eligible for the new subsidy than in previous years, but some of the most well-known EVs still qualify, according to the Monday announcement.

Under the new rule, consumers can get up to $7,500 back in tax credits on eligible cars.

Sixteen new models and some of their variations are eligible for all or half of the new credit, while nine models — mostly foreign-made vehicles — are no longer eligible, for now.

Most of the eligible cars so far are made by the “big three” EV automakers in the US — Ford

(F)
, General Motors and Stellantis — plus Tesla

(TSLA)
.

Here’s what you need to know.

2022-2023 Chrysler Pacifica PHEV

2022-2023 Jeep Wrangler PHEV 4xe

2022-2023 Jeep Grand Cherokee PHEV 4xe

2022-2023 Ford F-150 Lightning (standard and extended range)

2022 Ford e-Transit

2022-2023 Ford Mustang Mach-E (standard and extended range)

2022 Ford Escape Plug-in Hybrid

2022 Lincoln Corsair Grand Touring

2023 Lincoln Aviator Grand Touring

2022-2023 Chevrolet Bolt

2022-2023 Chevrolet Bolt EUV

2023-2024 Cadillac LYRIQ

2024 Chevrolet Silverado EV

2024 Chevrolet Blazer EV

2024 Chevrolet Equinox EV

2022-2023 Tesla Model 3 Standard Range RWD

2022-2023 Tesla Model 3 Performance

2022-2023 Tesla Model Y AWD

2022-2023 Tesla Model Y Long Range AWD

2022 Tesla Model Y Performance

Nine models, mostly from foreign brands including Hyundai and Nissan, do not qualify for the new tax credit. However, that could — and likely will — change in the coming months and years as some of these brands are building factories in the US to assemble their vehicles.

A separate tax credit applies to used EVs, and it doesn’t carry such stringent requirements on battery content or manufacturing. Used EVs qualify for less of an overall tax credit and also come with certain income requirements.

Similarly, leased vehicles can also qualify for a $7,500 tax credit without some of the strict rules about the car’s batteries and final assembly, meaning consumers who want more choice on which model to drive could settle on leasing instead of buying outright.

The list of eligible new and used EVs will be updated at www.fueleconomy.gov.

Under the new rule, consumers can get up to $7,500 in tax credits on eligible cars. There is no limit to the number of EVs automakers can sell with tax credits, as long as those vehicles meet the requirements. This is a change from the previous rule, which capped the number of vehicles that could be sold with the tax incentives.

Some cars that were previously eligible for tax credits were removed under the new rule. But administration officials told CNN more cars will be added to the list as automakers scramble to move their factories and supply chains to the US and other countries with these free trade agreements, though that could take months or even years.

The new Treasury rule on EVs comes from the Inflation Reduction Act, the climate and clean energy law passed by Congress last year. The rules were written in a way help move the supply chain for the critical minerals needed for things like EV batteries, solar panels and smaller rechargeable batteries away from China.

There are two major requirements that auto makers need to meet if they want their EVs to be eligible for the $7,500 tax credit: a critical mineral requirement and a battery component requirement, which are each worth $3,750.

The critical mineral requirement mandates a certain percentage of the value of the critical minerals that power EV batteries — like lithium, nickel, graphite and copper — must be extracted or processed in the United States, or a country that it has a free-trade agreement with. The minerals could have also been recycled in North America. The battery component requirement mandates that a certain percentage of the value of the battery components must be manufactured or assembled in North America.

Importantly, these requirements will ramp up over several years. For critical minerals, the percentage will start at 40% in 2023 and ramp up each year to 80% by 2027. For battery components, the percentage will start at 50% and ramp up each year to 90% by 2028.

Administration officials and experts agree the rules are incredibly complicated to implement in a very short timeframe.

“They’re just quite complex,” White House senior adviser John Podesta recently told CNN.

Twenty-one countries will have free trade agreements on critical minerals with the US: Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, Singapore and Japan.

Countries including Chile and Australia are notable, as both have a vast supply of lithium and extensive mining operations. Senior administration officials said the new rule will make these countries’ lithium more competitive: Instead of going to China the minerals could go to Japan or Korea, or directly to the US. Korea, Mexico and Japan have major car assembly operations, and many of those cars end up sold in the US.

Biden has said the US is also negotiating adding the European Union to the list, and others could be added in the future.

The last few months have seen a wave of announcements from car companies that are moving their EV and battery production factories to the US and neighboring countries.

But experts and officials say the start of the critical mineral supply chain — mining and refining critical minerals — will be the most difficult aspect to change. That’s in large part because China has a tight grip on it. The US has just a few lithium mines, located in Nevada. Companies are vying to start mining lithium around California’s Salton Sea, though no commercial operations have started yet.

The Department of Energy “can give a loan to build a battery manufacturing facility,” Boylan said. “It’s a whole different ballgame from talking about permitting an open-pit lithium mine.”

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