Federal EV tax credits have been a hot-button topic of late. The government has recently released updated guidance on what level of foreign content will disqualify a vehicle from tax credits, and it’s bad news for cars using batteries that contain materials from countries unfriendly to the United States. A significant number of EVs are going to lose their eligibility come January 1, 2024, and the Tesla Model 3 is right among them.
Yes, you’ve got just 19 days left if you want to secure a Tesla Model 3 Long Range or RWD with the full $7,500 federal tax credit. While there was some initial hope the models might still receive a lesser $3,750 next year, that’s not the case. The latest guidance means that these models will receive zero tax credits from New Year’s Day. It’s all down to these models having Chinese-made (CATL) batteries with enough material sourced from enough “foreign entities of concern” to disqualify them.
It means you’ve got to move fast if you want to lock one in with the credits as the rules mean you need to take delivery by December 31st. Run, don’t walk, to your Tesla not-a-dealership if you’re thirsty for a cheap deal.
BREAKING: Tesla has received updated guidance from the IRS. The Model 3 RWD & Long Range will lose the ENTIRE $7,500 Federal EV credit starting January 1, 2024.
Tesla previously thought the EV credit for those trims would be cut to $3,750, but now their interpretation is $0.… pic.twitter.com/VlruMDM31H
— Sawyer Merritt (@SawyerMerritt) December 13, 2023
The rules are increasingly strict year-on-year. For 2024, 60% of battery components must be of US origin to secure $3,750 in tax credits. This ramps to 100% by 2029. Meanwhile, 50% of the battery materials by value must be domestic or from a country with a U.S. free trade agreement to secure a further $3,750 credit. That figure will ramp up to 80% by 2027. Sedans over $55,000 and SUVs and trucks over $80,000 are also ineligible.
But it’s the “foreign entity of concern” provision that has the biggest impact. Any battery components from such a country disqualify a car from tax credits entirely, and in 2025, any material content from such countries will do the same. While Russia, North Korea, and Iran are all included on that list, it’s mostly about China, which has become a manufacturing and mining powerhouse for EV batteries and materials.
It’s not just Tesla that’s feeling the heat here. According to reporting from The Street, just 10 cars will be eligible for the full credits come January 1 next year. Chevrolet dominates the list, with the Bolt EV (which is being discontinued), Equinox EV, Silverado, and Blazer EV all still eligible. The Cadillac Lyriq also meets the requirements. At Tesla, the Model X, Model 3 Performance and Model Y Performance all meet the rules, as does the Ford F-150 Lightning and the Chrysler Pacifica PHEV.
The changing requirements will do a lot to incentivize automakers to bring their battery manufacturing to the US, along with as much mining as possible as $7,500 is a lot of money. It’s plenty enough to sway a buyer towards one model and away from another, and it’s more than most automakers could cut out of margins to stay competitive. It’s an exciting and complicated time to buy an electric car, but if you can keep track of the money that’s on the table, you can still get yourself a good deal.
Pardon me but you’ve mistaken me for someone that gives a fuck. Model 3’s are the beige Camry of the EV world. And qualifying for the rebate means your household income is less than $300k per year. Loser.
He might have mistaken you for someone less snarky, in any event.
Six articles posted so far today. Three are TESLA/Turdboy related.
Is there nothing else in the automotive universe worthy of writing about?
Seriously. As in seriously exhausted by all the attention an idiot and his vehicles receive. Just saying.
Elon Musk may be the greatest single beneficiary of corporate welfare, ever.
Definitely considering the company would not exist today if they did not profit from selling credits to other companies it’s entire existence.
ExxonMobil would like a word.
Of course a government policy designed to curb emissions hamstrung itself because it ran out for the cheapest model which in theory would have a larger impact on emissions due to lower cost.
Unfortunately the world is a sea of gray, not black and white.
Could they have just subsidized the cheapest EVs? Yes.
Could that included letting in cheap Chinese EVs or Chinese products? Yes.
Would that have been better for (local) environment? Yes.
Would that have been very bad for domestic manufacturing by letting Chinese government-subsidized manufacturing to undercut domestic costs? Yes.
Would that have prevented the development and growth of mining and manufacturing in domestic and friendly free-trade markets? Yes.
Is that potentially bad for national security? Yes.
Unfortunately all policies are compromises to drive change in a desired direction, while trying to minimize negative side-effects.
Why does the world have to be gray? It’s so… complicated!
I feel like you could accommodate the trade issues and keep subsidizing EVs. But that won’t line Mary Barra’s pockets as much.
Makes me glad I picked one up 3 months ago. Model 3 RWD, inventory discount down to $37k, plus the full $7,500 tax credit
Same! Love having the car, don’t love having a Tesla. Installed chargers at work (and initial 3 months free supercharging) mean I’ve driven 12K miles and paid $40 of electricity.
I’m undecided if this is good or bad.
If the goal is to increase EV percentage of total vehicle sales, it’s bad.
This will surely result in less EVs sold.
On the other hand, I don’t agree with subsidizing EVs either, I would be in favor of subsidizing renewable and nuclear kWh prices more instead.
Precisely. No matter which way you look at it, the government is not subsidizing for greatest impact on the environment. It’s my opinion that it’s no coincidence that the age of vehicles on the road is the highest it’s ever been and then the feds go and make those vehicles illegal starting in a few years. Ignoring the fact that they ARE 12.5 years old BECAUSE no one can or doesn’t want to afford a new car. And now we’re full circle; the subsidy has ran out for one of the cheapest options; limiting the environmental impact we could have if we’d subsidize better.
And if we stop subsidizing oil, that would have the biggest impact
And decimate the middle class. You can’t pull the rug out from under the majority of the nation and expect good things to happen.
What middle class? That went away in the ‘90s!
Well there is still a class of people that reside in the middle of the classes. 😉
I could have missed it, but I don’t think I’ve seen any initiative to remove existing ICE-powered cars from the roads when sales of new ones are halted.
That is correct. I should have said made production of those vehicles illegal. Human nature is going to push people to buy a new EV, that may or may not be as affordable, because they know their current ICE vehicle is out of production and old technology.
It’s not happened yet, I don’t think, but there will be cities where ICE vehicles simply won’t be allowed. EU cities did it with diesels. It will happen with gasoline too. Thus, making ICE powered cars illegal. Forcing people to buy EVs. I can’t really do much to stop it, but I question if that’s actual progress toward sustainability. I’m just an old man yelling at clouds…
I’ve posted above too, but the government is not subsidizing for the greatest impact on the environment. These policies don’t exist in a vacuum.
All policies are compromises to drive change in a desired direction, while trying to minimize negative side-effects.
So, the goal is to incentivize domestic and other free-trade markets to develop and grow mining, manufacturing, etc. that will allow them to be competitive (with China) in the battery/electric market of the future.
That will lead to environmental benefits, but also more immediate domestic market and national security benefits.
NYS also has a $2000 rebate on the Model 3 (RWD version only). But still, I’d rather have the older tech in the Chevy Bolt (also qualifies for federal and state rebates) and not deal with Tesla.
Same. I’ll gladly take the older tech for less money and not having to deal with Tesla.
2024 seems like a bad year to purchase an EV. Tesla’s losing the credit on their most popular models, and it seems everyone else will still need another year before switching over to NACS and that sweet supercharger compatibility. I’m guessing we’ll see more headlines about EV sales slowing throughout next year.
This is a valid point. With everyone planning to move to NACS, buying an EV without one seems like an unwise move that I’m sure will dissuade a fair amount of folks from buying soon (as will interest rates).
If you charge at home and use your EV primarily for commuting and local trips, the NACS/supercharger stuff may not matter. I rarely use public charging, and mostly only if it’s free or near the same price I would pay at home. We have an ICE that we use for vacations/long trips.
The Bolts are probably going to disappear fast, since the next option on the list is nearly double the price. I don’t think there’s a nicer “cheap car” out there considering that with rebate, it’s easy to get it under $20,000… plus you get fuel savings if you charge at home at night on a good rate.
Agreed. Actually may be able to get a great deal on a non NACS car. I’ve had my Clarity going on five years, and have charged it away from home two times, on the same trip in 50,000 miles. Having a hybrid helps though, as you can run it as a gas car. as needed.
Although at least the credit becoming point of sale should be a slight boon, especially for the Used EV credit market. It’ll still probably be a clusterfuck since it sounds like a lot of dealers don’t know about it even existing or have been trained to plug their ears and go ‘talk to your tax professional’ when it comes up.
That is a good point, that should help some. As long as you find a dealer who understands the system that’s $7.5k you don’t need to finance at crazy interest rates. Still, about half of the list of cars that are eligible aren’t available in any meaningful numbers until GM gets their Ultium issues figured out.
No, but thanks for the offer. It’s just not good enough.
No thanks!
I just can’t justify giving any of my money to Musk.
Alliteration award allocated!
I’d rather buy Trump a birthday present at this point.
Is Tesla lowering the price even more? We will see January 1st…