According to the US Treasury Department, new EVs leased by consumers beginning January 1, 2023, may be eligible for as much as $7,500 in “commercial” tax credits. This apparently allows EVs assembled outside of North America to qualify. However, to be clear, there have been no changes to the original guidance related to the assembly requirements.
When the new US federal EV tax credit first surfaced, it was somewhat confusing, as always. We worked to figure out all the details, though it seems government officials are going to continue to make changes, some temporary and some permanent. Moreover, we won’t have all the official details until at least March, when the US Treasury hopes to be finished dealing with the specifics surrounding battery requirements.
Automotive News notes that the new announcement about the EV leases will help some brands that hoped to allow consumers to use the commercial electric vehicle tax credit to open up more options for US shoppers. Reducing lease prices is a big step forward since many people lease new cars today rather than financing them. Interest rates are high, and even with a tax credit, monthly car payments can be hard on the budget. It’s typically cheaper per month to lease, and it means warranty coverage for the full term and a new car every few years.
When the clock struck 12:00 AM on January 1, 2023, many automakers that sell EVs in the US saw their customers potentially lose access to the federal electric car tax credit. The credit starts fresh, and even companies like Tesla and GM that reached the previous credit’s 200,000 EV cap are once again eligible. However, foreign automakers and those that manufacture vehicles and source materials outside the US may not easily qualify once the rules are finalized. That said, the “commercial” credit doesn’t have sourcing requirements.
Democratic Senator Joe Manchin, who had a big hand in getting the bill passed, is already pushing the US Treasury Department to pause the new credits until all the details are worked out. He’s concerned that companies are looking for loopholes that will negate the original intent of the bill.
The Treasury now has until March 2023 to officially release the new guidelines for the sourcing of EV battery materials. Until then, many current electric cars may already fall into a loophole that will help automakers and consumers.
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