Do you want to buy a new electric car? It's great! The most sought after new vehicle is an EV. They are fun to drive and are better for the environment than a gas powered beater.
It's hard to find a new EV, and Congress and President Joe Biden made it worse. The most important climate bill ever passed into law was signed by Biden on Tuesday. New tax credits for electric vehicles are part of the bill.
The tax credits are actually a confusing morass of eligibility requirements and sourcing provisions
It sounds great. Do you think again? The tax credits are not easy to understand and may limit what people buy. Income caps, sticker price requirements, battery and supply chain limitations, and different phases in which the old credits will still work but new requirements apply Do they want people to buy electric vehicles or not?
You can get help from a friend in The Verge. We should dive in.
There is a tax credit at the point of sale for new and used electric vehicles. The old incentive system only included a small amount of tax credits for new EV's.
There are a couple of new rules that go into effect after President Biden signs the bill. Most of the new rules won't go into effect until December 31st, 2022, and will stay in place until 2032, but let's discuss what you need to know now.
The EV must be assembled in North America in order to be eligible for the tax credit. How am I supposed to know where the vehicle is made? The Biden administration has a list of 20 electric vehicles that can be used.
I received bad news. There are no tax credits for those electric vehicles made in South Korea.
Both Germany and Japan are located in Europe.
Under the previous rules, there was a phaseout of the tax credit for over 200,000 sales of electric vehicles by these companies. The current tax credits do not apply to these companies.
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It's not yet! Some of the new rules are in effect, but most don't kick in until the New Year. I told you this would be confusing.
The 200,000 vehicle cap is going to go away. There was a poof. They will once again be eligible for the tax credit.
Good luck trying to find something right now. There is very little inventory of EV and high demand. Waitlists are long, and dealers are marking up new EV's. It is a perfect storm if you don't get what you want.
If you can afford it, go for a premium or luxury electric vehicle. Before the new rules make things more complicated, both companies are trying to get customers to sign written binding contracts. There will be a lot more requirements after the new year about who can claim the credit.
Any customer with a written contract for purchase of a new electric vehicle before the law goes into effect may choose to take the old tax credit even if the vehicle is delivered after the bill is enacted.
Before these changes were announced, customers interested in buying an EV could put down a couple hundred dollars for a deposit. Customers are encouraged to sign binding contracts in order to improve their chances of getting a tax credit under the bill.
If you have a lot of money, now is the time to spend it. There is no income requirement for who can claim the credit right now. The credits will be capped at an income level of $150,000 for a single taxpayer and $300,000 for two people.
If you’re rich, now is the time to buy
The manufacturer's suggested retail price of $55,000 for a new car and $80,000 for a pickup truck, SUVs, and vans will be the limits on which EV's qualify for the credit. The final price is what counts for the credit, so keep that in mind.
The price caps don't apply until the end of the year.
When the Chevy Bolt EUV and theTesla Model 3 are available for the credit, I would recommend waiting. The cap is going to be removed.
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Now is a good time to discuss the other major provision in the climate bill that is causing headaches for the auto industry. China, where the vast majority of battery parts and minerals come from, will no longer qualify for the tax credit if they are put in service after the end of the year. The battery will be ineligible for the credit if it only contains minerals from certain countries.
To be eligible for the tax break, batteries need to have at least 40% of their materials from North America or a US trading partner by the year 2024. The components of the battery would have to be made in North America. This restriction doesn't apply to used cars.
The new mineral and mining rules apply to cars. We don't know.
According to the Alliance for automotive innovation, it's true.
There are 72 EV models available for purchase in the US according to the alliance. 70 percent of the models are not eligible for the tax credit when the bill is passed. None of them would be eligible for the full credit by 2029.
It is still possible. Once the auto industry brings its battery manufacturing and supply chain into North America, the real benefits of the new tax credit will be felt.
Experts concede that these new rules are likely to slow down EV sales in the short term
The 200,000 vehicle cap is something to think about. The phaseout was expected to happen any day now. Most auto manufacturers were expected to hit the cap sooner or later. As of January 1st, the cap is gone, and a lot more cars will be eligible for the credit.
The details of the plan are still being worked out. The precedent that allowed many manufacturers to avoid "Buy America" rules that were enacted as part of last year's bipartisan infrastructure law has some hope for the auto industry.
The mining operations are being brought to the US by some auto companies. GM struck a deal to get the key ingredient in EV batteries from the Salton Sea Geothermal Field.
As the clean energy economy starts to boom, there are a lot of questions about the other key ingredients, like nickel, cobalt, and magnesium minerals.
You and I are both friends.
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