With President Biden signing the Inflation Reduction Act today, your time is nearly up to get your purchase paperwork completed for a new EV or plug-in hybrid.
While the revamped EV tax credit contained in the bill includes many top-level provisions that are likely to set the supply chain up for more American-made EVs soon, the revamped tax credit in the short term will be taking bottom-line money away from many looking to purchase an EV or plug-in hybrid.
The tax credit knocks out higher-priced and luxury EVs, with a cap of $80,000 for vans, SUVs, and pickups, and a cap of $55,000 for passenger cars.
It also sets a maximum adjusted gross income (AGI) for those who can claim the credit, of $150,000 for single filers, $225,000 for heads of households, and $300,000 for joint filers.
2022 Rivian R1T
There has been an exception on the eve of the new rule, which starts as soon as Biden signs: A binding purchase contract will grandfather in the old qualification terms. Fisker may have had the right idea in tying up orders for its Ocean One launch edition recently. And fellow startup electric vehicle makers Rivian and Lucid are among several brands that have flexed the rules a little bit in recent days to help make more orders binding.
The tax credit is almost certainly gone for the rest of 2022 and will be back at the beginning of 2023 for a smaller group of vehicles. There are domestic-content and supply-chain rules that need guidance from the Treasury Department, and automakers will shift to more U.S.-sourced batteries and components, but this won’t happen overnight—or even in a year.
In the meantime, to keep this as simple as possible, we’ve looked at price and final assembly location—distilling the federal government’s current list of eligible vehicles down in steps—as a starting point for getting a realistic idea of which vehicles will be eligible in calendar year 2023.
FULLY ELECTRIC VEHICLES
Electric vehicles that currently qualify but are too expensive to meet the new price caps:
Audi E-Tron GT
Genesis G80 Electrified
GMC Hummer EV
2022 Mercedes-Benz EQS AMG
The tax credit is almost certainly gone for the rest of 2022 and will be back at the beginning of 2023 for a smaller group of vehicles.Electric vehicles that would continue to qualify by price but aren’t built in North America:
Audi E-Tron SUV and Sportback
Audi Q4 SUV and Sportback
Hyundai Kona Electric
Hyundai Ioniq 5
Kia Niro EV
Mini Cooper SE
Volvo C40 Recharge
Volvo XC40 Recharge
2023 Hyundai Ioniq 5
That leaves this list of EVs that would likely qualify in 2023 on price and assembly point in 2023 (before tighter supply-chain rules):
Chevrolet Bolt EV (with the lifting of the 200,000-vehicle cap)
Ford Mustang Mach-E
Ford F-150 Lightning
Tesla Model 3 (with the lifting of the 200,000-vehicle cap)
Tesla Model Y (with the lifting of the 200,000-vehicle cap)
2022 Tesla Model 3
Plug-in hybrids will continue to qualify as clean vehicles eligible for the credit based on their battery size. But these simply don’t meet the price cut.
Audi A7 TFSI e Quattro plug-in hybrid
Bentley Bentayga Hybrid
BMW 530e xDrive
BMW 745e xDrive
Land Rover Range Rover Plug-In Hybrid
Land Rover Range Rover Sport Plug-in Hybrid
Porsche Cayenne E-Hybrid
Porsche Panamera 4/S E-Hybrid
2021 Porsche Cayenne E-Hybrid Coupe
These plug-in hybrids currently qualify on price but don’t have final assembly in the U.S.
Audi Q5 TFSI e Quattro plug-in hybrid
BMW X5 xDrive45e
BMW 330e and 330e xDrive
Hyundai Tucson Plug-In Hybrid
Hyundai Santa Fe Plug-In Hybrid
Kia Niro Plug-In Hybrid
Kia Sorento Plug-In Hybrid
Lexus NX 450h+
Mini Cooper SE Countryman ALL4
Mitsubishi Outlander Plug-In Hybrid
Toyota Prius Prime
Toyota RAV4 Prime
Volvo S60 Recharge Extended Range
Volvo V60 Recharge Extended Range
Volvo XC60 Recharge Extended Range
Volvo S90 Recharge Extended Range
Volvo XC90 Recharge Extended Range
2021 Toyota RAV4 Prime XSE
That leaves this list of plug-in hybrids that will likely qualify in 2023 (before tighter supply-chain rules):
Chrysler Pacifica Hybrid
Ford Escape Plug-In Hybrid
Jeep Wrangler 4xe
Jeep Grand Cherokee 4xe
Lincoln Aviator Grand Touring
Lincoln Corsair Grand Touring
2021 Jeep Wrangler 4xe