Electric automobile investors should make a note of September 30 for a significant event. Here's the reason behind it.
The U.S. tax credits for electric vehicles (EVs) are set to expire on September 30, 2023, and many automakers are racing against time to make the most of the incentives. Here's a breakdown of the qualifying criteria for the credit.
To qualify for the credit, an EV or plug-in hybrid vehicle (PHEV) must be manufactured in North America. At least 40% of the critical minerals in the vehicle's battery must be produced in the U.S. or one of its free trade partners. Furthermore, at least 50% of the vehicle's battery components must be produced or assembled in North America to qualify for half of the credit.
Currently, only 20 new vehicle models qualify for the credit. Tesla, General Motors, Stellantis, Acura, Honda, Hyundai/Genesis, and Kia have models on the eligibility list. However, many configurations of these models may not qualify due to MSRP limitations. For instance, a Tesla Model X qualifies only with an MSRP of $80,000 or below for SUVs, and $55,000 or below for sedans, wagons, or hatchbacks.
Unfortunately, no electric vehicles from Lucid or BMW qualify for the credit, as they exceed the MSRP limit or are not manufactured in North America. Ford, on the other hand, has only one model on the eligibility list.
The tax credit can be worth up to $7,500 for new EVs and $4,000 for used EVs. However, there's a "leasing loophole" that excludes leased EVs and PHEVs from many regulations, which could limit the benefits for some consumers.
It's also worth noting that the buyer's adjusted gross income (AGI) must be less than $150,000 (single) or $300,000 (joint filers) to claim the credit.
In July, more than 130,000 new electric vehicles were sold, the second highest total for a single month ever, and 36,700 used electric vehicles changed hands, which was the highest number on record. This indicates a growing interest in electric vehicles, making the expiration of the tax credits a significant event for the industry.
As the deadline approaches, consumers planning to purchase an electric vehicle should carefully consider the qualifying criteria to maximise their savings. Tesla, General Motors, and other eligible automakers will be affected by the expiration of the US tax credits for electric vehicles on September 30.
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