The days of full tax credits across the U.S. electric vehicle lineup have unfortunately come to an end. As new rules take effect on April 18, 2023, potential EV shoppers are about to see a big change as they look at the available electric vehicle options. For better or worse, this means that while some vehicles are still able to lay claim to the full tax credit, other vehicles and their respective manufacturers now have to try and market to buyers without any tax credit references. Let’s take a look at the entire list of nine vehicles that have lost the full EV tax credit.
What Is the EV Federal Tax Credit?
As it stands as of April 18, 2023, the federal tax credit for electric vehicles can still offer up to $7,500 as a tax rebate depending on which EV you purchase. The updated list of requirements from the U.S. Treasury now has a couple of critical mandates in order to qualify:
- First and foremost, a certain percentage (at least half) of both critical battery minerals and components inside each electric vehicle is to be sourced from the United States or a U.S. trade partner
- The vehicle price must not exceed $80,000 for vans, SUVs or pickup trucks
- The vehicle price may not exceed $55,000 for other vehicles
- A vehicle may not weigh over 14,000 pounds
- Any EV must be produced by a qualified manufacturer and undergo final assembly somewhere in North America
- The vehicle must be new (used vehicles have separate requirements)
- The seller (e.g. dealership) must provide you with some type of certification. You must then provide it to the IRS when you file a claim
- The vehicle must be bought for personal use only and used primarily in the United States
- Buyers may not exceed $300,000 of reported income when filing as a joint married couple. The cap is $225,000 when filing as a head of household or $150,000 in income for any other filer
Assuming all of the criteria have been met, the federal EV tax credit now breaks down as follows if a vehicle is purchased after April 18, 2023. If the vehicle just meets the requirement of the critical mineral, it will only qualify for a $3,750 rebate. The same goes if it only meets the battery components requirement. If both requirements are met, as well as all of the above qualifications, the full $7,500 rebate applies.
What Vehicles Do Not Qualify?
Okay, so, now that you know the new requirements, let’s see which vehicles, for one reason or another, do not meet the requirements. After April 18, 2023, the following vehicles will not receive any of the potential $7,500 in tax credits.
Unfortunately for Audi, the Audi Q5 e-Quattro plug-in hybrid no longer qualifies for any tax credit after April 18, 2023. This vehicle is mostly produced for European markets, but it can still be driven on U.S. roads if imported. However, it will not qualify for any type of tax credit.
For BMW, this was a double whammy. Now has two vehicles that do not qualify for the full tax credit. Both the BMW 330e and BMW X5 Drive45e are no longer eligible for any federal tax rebates. The BMW 330e almost made the cut had its battery been made in North America, but that is no longer the case.
While the Genesis GV70 was previously eligible for a full tax credit of $7,500, as of April 18, 2023, that is no longer the case. Even though the vehicle is manufactured at a plant in Alabama, it failed to meet the rest of the requirements in order to qualify for even partial credit.
Nissan received the unfortunate news that none of its Leaf lineup, its longtime EV staple, will qualify for any part of the $7,500 rebate. This includes the Leaf S, SV, SV Plus, S Plus and SL Plus, as all trim levels are excluded from the federal tax credit. According to Nissan, it will be 2026 before they are able to comply with IRA requirements.
As popular as the Rivian has become with its fun-to-drive personality, incredible amounts of storage, and overall power, it no longer qualifies for a federal tax credit. Both the R1S and R1T are impacted by this change. This is a disappointing turn of events for an electric vehicle that is still widely considered to be one of the best options on the market.
While the U.S. Treasury announced the Volkswagen ID.4 as no longer qualifying for the tax credit, things are not quite what they seem. According to Volkswagen, the ID.4 is manufactured at their Chattanooga, Tennessee manufacturing plant. Therefore, it should be eligible for at least $3,750 of federal tax credits. The company has indicated they are waiting on additional guidance from the U.S. Treasury Department on whether the vehicle would, in fact, qualify for the full tax credit.
The Volvo S60 PHEV plug-in hybrid has also lost the full EV tax credit. The S60 makes up the last of the new list of guidance around which vehicles do not qualify for a federal EV tax credit. Even as a vehicle that can go up to 41 miles in pure electric mode, it was removed from the list of qualifying vehicles.
Interestingly enough, for the vehicles on the list above, there is a potential loophole that still might allow for a $7,500 federal tax credit. However, this only applies if the vehicle is leased instead of purchased. Under one particular section of the Inflation Reduction Act of 2022 (Section 45W), commercial buyers of a leased EV are eligible for the tax credit without any of the restrictions that were outlined above.
This would allow any business that leases out vehicles to consumers to potentially qualify. However, it would not work for any individual buyers. The list of potentially qualifying vehicles is pretty extensive and includes all of the vehicles outlined above.
What Vehicles Do Qualify?
Even as there is a list of vehicles that have lost the full EV tax credit, there is still hope. There are still a number of vehicles that continue to qualify. Thankfully, the list still includes plenty of in-demand electric vehicles:
- Cadillac Lyriq
- Chevy Silverado EV
- Chevy Blazer (Coming soon)
- Chevy Bolt
- Chevy Bolt EUV
- Chevy Equinox (Coming soon)
- Chrysler Pacifica PHEV
- Ford F-150 Lightning
- Lincoln Aviator Grand Touring Plug-in Hybrid
- Tesla Model Y (AWD, Long Range, and Performance)
- Tesla Model 3 (Performance)
Do Used Vehicles Still Qualify?
Another bit of good news for anyone looking to purchase one of the above vehicles — you can pick it up used with a different set of requirements. While the federal tax credit is lower, it’s also available for all vehicles so long as they (and you) meet these requirements:
- Any electric vehicle needs to be purchased from a licensed electric vehicle dealer and not a third-party seller
- The vehicle must be used primarily in the United States
- Cannot be purchased by someone who is claimed as a dependent on a tax return
- The federal tax credit will also not apply if you are the original vehicle owner
- Any vehicle can only claim the federal tax credit once. So if it was not claimed when the vehicle was sold as new, it would still qualify
- The purchase price needs to be $25,000 or less
- The vehicle needs to be at least two years old (based on model year). It must meet the same weight and battery size requirements as a new vehicle
- As far as income requirements, the income caps are $150,000 for married filing jointly, $112,500 for head-of-household filers, and up to $75,000 in income for all other filers
As it stands in April 2023, the nine vehicles that have lost the full EV tax credit, or 8 if you believe the Volkswagen ID.4 will be reinstated, represent some of the lesser-known electric vehicles. The reality is, with the exception of the Rivian, the Leaf, and the Volkswagen, the rest of the list is not full of EV best sellers. Ultimately, the impact on consumers should be minimal; more so than if a vehicle like the Tesla Model Y were fully removed from the federal tax credit.