Changes to Electric Vehicle Tax Credits in 2024 Explained

AI-created, human-edited.

The landscape for US electric vehicle tax credits has shifted dramatically in 2024. On a recent episode of Tech News Weekly, host Mikah Sargent spoke with automotive analyst Sam Abuelsamid about what consumers can expect with the updated federal EV tax credit program.

According to Abuelsamid, the Inflation Reduction Act passed in 2022 brought significant changes to EV tax credits. Most notably, purchase caps per automaker have been eliminated. However, new restrictions focus on sourcing components and materials from North America. The goal is to encourage localization of EV and battery production in the US and reduce reliance on overseas supply chains.

As of January 1, 2024, federal tax credits now require final vehicle assembly in North America. Additionally, a percentage of battery components and critical minerals must originate from North America or a country with a free trade agreement with the US. Non-compliant countries like China will disqualify vehicles. As a result, the number of qualifying EV models has been reduced in 2024. Automakers are working quickly to bring sourcing into compliance, with some expecting to regain eligibility within months.

A key change for consumers is that federal tax credits can now be taken as a point-of-sale rebate when purchasing from a participating dealer. This makes EVs more affordable upfront instead of waiting to file taxes the following year. Tax credits for used EVs have also been introduced.

In summary, stricter requirements aim to boost domestic manufacturing for EVs purchased in 2024 and beyond. However, purchase incentives through instant rebates will be more impactful for consumers. As automakers shuffle their supply chains, EV options meeting the criteria will be narrowed but should expand again over time.
 

Become a subscriber and never miss an episode: Tech News Weekly