BMW, Rivian, Hyundai, Volvo lose access to EV tax credit

The US Treasury updated its list of electric vehicles eligible for a $7,500 EV tax credit under its new rules for battery sourcing, and BMW, Nissan, Rivian, Hyundai, Volvo and Volkswagen are no longer on it.

The new requirements will go into effect Tuesday and will also reduce the credits for the Tesla Model 3 to $3,750. Other Tesla models will continue to be eligible for the full $7,500 credit. All General Motors electric vehicles, including the Chevrolet Bolt and Bolt EUV, will also qualify for the full credit.

The EV tax credits were mandated by Congress last August as part of the Cut Inflation Act. The IRA requires that 50% of the value of the battery components be produced or assembled in North America to qualify for $3,750. To qualify for the remaining $3,750, 40% of the value of critical materials must come from the US or a free trade country.

The rules are designed to help the US reduce its dependence on China for the supply of batteries for electric vehicles and to increase the US’s ability to control the supply chain. President Joe Biden has a goal for 50% of new vehicle sales in the US to be electric or hybrid by 2030.

Treasury’s move to put its guidance into effect this week follows tough new emissions rules proposed by the Environmental Protection Agency that would make 60% of new vehicle sales by 2030 electric.

The EVs that will lose credits on Tuesday are the BMW 330e, BMW X5 xDrive45e, Genesis Electrified GV70, Nissan Leaf, Rivian R1S and R1T, and Volkswagen ID.4, though VW thinks it will get the ID.4 to qualify and is waiting. in a provider’s documentation to determine eligibility. Plug-in hybrid vehicles such as the Audi Q5 TFSI e Quattro and Volvo S60 will also lose credits.

Additionally, Ford and Stellantis vehicles that previously qualified for the full tax credit will now only have access to half.

With the exception of Volvo, which is a Swedish company but majority owned by Chinese Geely, most automakers have plans to build battery plants in the US.

Hyundai and Rivian, for example, are building plants in Georgia. Volkswagen is building the ID.4 in Chattanooga, Tennessee, and has chosen Ontario, Canada, as the location for its North American battery plant. BMW is investing $1.7 billion in vehicle and battery manufacturing in South Carolina.

There is a loophole for electric vehicles that do not qualify for consumer tax credits. Treasury said in December that ineligible electric vehicles could potentially qualify for a commercial lease credit, also worth $7,500.

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