**Introduction:**
In recent weeks, the IRS has updated its list of North American-built electric vehicles that qualify for the EV tax credit in 2024. The new rules set stricter requirements for battery origin and critical mineral content, impacting which models are eligible for the full $7,500 tax credit. This article will explore the changes to the EV tax credit for 2024 and which models are currently qualifying.
**Tougher Rules on EV Battery Origin:**
The revamped EV tax credit under the Inflation Recovery Act of 2022 imposes stricter rules on the origin of battery components and critical minerals. As of 2024, in addition to North American assembly, 60% of battery parts must be sourced from North America to qualify for half of the credit amount ($3,750). Additionally, at least 50% of critical mineral content in batteries must be sourced from North America or countries with free-trade agreements.
**Applying a China Filter:**
Starting January 1, 2024, vehicles with key battery components sourced from countries such as China, Russia, Iran, or North Korea are disqualified from the tax credit. This rule adds another layer of scrutiny to the origin of battery components and aims to promote a domestic supply chain for EVs as part of the Biden administration’s initiatives.
**EV Leasing Loophole Continues:**
Despite the stricter rules for purchasing EVs, an EV leasing loophole allows commercial vehicles to receive the full $7,500 tax credit regardless of their origin or domestic content. This loophole effectively subsidizes imported luxury EVs, highlighting a discrepancy in the tax credit regulations.
**The Credit Becomes a Dealership Rebate:**
In 2024, the EV tax credit will transition into an instant dealership rebate, giving buyers immediate access to the credit and lowering the upfront cost of the vehicle. Buyers will need to provide a declaration of eligibility, and dealerships must register with the IRS to facilitate the process. However, the implementation of this new system may pose challenges, as many dealerships have yet to register for the tax credit.
**Which Models Qualify for the Full Tax Credit?:**
The list of models that qualify for the full $7,500 tax credit in 2024 includes vehicles like the Cadillac Lyriq, Chevrolet Bolt EV, Ford F-150 Lightning, and Tesla Model 3 Performance. However, some popular models, such as the Ford Mustang Mach-E and certain Tesla and Rivian models, do not qualify for the full tax credit due to stricter regulations on battery origin and critical mineral content.