Planning on buying a new battery-electric vehicle in 2024 that's eligible for an Uncle Sam discount? Your options are now limited to only four manufacturers: Chevrolet, Ford, Rivian, and Tesla. Here's the gist of it.
"New year, new me" would have said the federal EV tax credit as the clock struck midnight on January 31, 2023. Officially known as the "clean vehicle credit" because it includes more than just battery-electric vehicles, the perk is now different. Fortunately, a few plug-in hybrids still qualify.
According to the US Department of Energy's Office of Energy Efficiency and Renewable Energy, the following EVs qualify for the federal incentive:
Ford F-150 Lightning with the Standard Range Battery;
Ford F-150 Lightning with the Extended Range Battery;
Tesla Model 3 Performance;
Tesla Model Y RWD;
Tesla Model Y Long Range;
Tesla Model Y Performance;
Tesla Model X Long Range;
Rivian R1S with the dual-motor (Enduro drive units) powertrain and the large battery pack;
Rivian R1S with the quad-motor (Bosch drive units) powertrain and the large battery pack;
Rivian R1T with the dual-motor powertrain and large battery pack;
Rivian R1T with the quad-motor powertrain and the large battery pack;
Chevrolet Bolt EV;
Chevrolet Bolt EUV.
Excepting Rivian's all-electric units, all others qualify for the full $7,500. The eligible R1T and R1S get only half.
Don't be upset if your preferred EV isn't on this list. It will most likely update and include more vehicles as this year drags on.
Photo: Rivian
This change has created an awkward situation for Tesla. Prospective buyers who can tap the EV tax credit can acquire a Model 3 Performance for less than they would've paid for a Model 3 Long Range. We'll see if Tesla does something about it or leaves it as is.
If you want to buy a plug-in hybrid (PHEV) that comes with a federal discount, you have five options:
Chrysler Pacifica;
Ford Escape;
Lincoln Corsair Grand Touring;
Jeep Wrangler 4xe;
Jeep Grand Cherokee.
Apart from the electrified minivan, all the other models get half of the EV tax credit.
Some notable absentees are the Fisker Ocean, the BMW i4/i5/i7/X5 xDrive50e, the Mercedes-Benz lineup of all-electric and partly-electric models, the Porsche Taycan, the Chevy Silverado EV, the Cadillac Lyriq, the Hyundai Ioniq 5, the Kia EV6, and the Ford Mustang Mach-E.
Photo: BMW
The two lists have been severely trimmed because the Inflation Reduction Act established stricter eligibility rules for 2024. For example, 50% of the critical minerals found in these cars' high-voltage batteries must be extracted or processed in the United States or in any country with which the United States has a free trade agreement in effect.
Besides that, 60% of the energy storage unit found in an eligible EV must be manufactured or assembled in Mexico, the US, or Canada. Simply put, manufacturers must try their best to avoid China if they want to sell discounted EVs to Americans.
But wait, there's more! The price limits of $55,000 for cars and $80,000 for SUVs/pickup trucks/minivans remain in place.
Customers themselves must meet some yearly gross income thresholds, too! For example, if you earn more than $150,000 as a single filer… Tough luck! You're out! That is especially problematic for Californians who haven't already switched to an EV. The Golden State exhausted the CVRP funds and didn't replenish the program's budget.
The EV tax credit can also apply at the point of sale from now on. Just make sure you're eligible before the dealer says that you are. Things can go south after you're done with the buying process.
Keep in mind that the tax liability rules are now gone. It doesn't matter if you owe $7,500 to Uncle Sam or not. As long as you and the vehicle meet all the other requirements, that EV tax credit is yours for the taking!
Fortunately, you can avoid all these regulatory headaches by simply leasing the EV of your choice. Manufacturers can obtain the EV tax credit for themselves and deduct it from the lease cost, just like Rivian started doing recently with the R1T. The two things you should ask and verify are: the selling party actually transfers the $7,500 to you, and you have it in writing that a buyout is possible.
Car shows on TV and his father's Fiat Tempra may have been Florin's early influences, but nowadays he favors different things, like the power of an F-150 Raptor. He'll never be able to ignore the shape of a Ferrari though, especially a yellow one. Full profile
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