The landscape of electric vehicle pricing in the US is undergoing a significant transformation in 2024 as regulatory changes take center stage, impacting the affordability of popular models.
The recent update from the US Treasury unveils a wave of price increases for EVs such as the Cybertruck, Nissan Leaf, select Tesla Model 3 variants, and the Chevrolet Blazer EV, as they lose access to crucial tax credits. The guidelines introduced in December are part of an overarching strategy to fortify the domestic electric vehicle supply chain.
In anticipating these changes, Tesla has already released a comprehensive list of vehicles eligible for federal tax credit. All variants of the Model Y are set to maintain access to the total credit. However, adherence to the new eligibility criteria, requiring assembly in North America, has resulted in excluding a significant portion of previously eligible models following an IRS law introduced in 2022. The regulations have been intensified since January 2023, introducing new price caps and income limits for prospective buyers.
Additional regulations, unveiled by the Treasury in April 2023, focus on battery components and critical mineral sourcing, now demanding final assembly to occur in North America. To qualify for the $7,500 credit, a minimum of 50% of the essential minerals of the battery must originate from the US or a country with a US free trade agreement. Furthermore, 60% of the EV’s battery components must be manufactured or assembled in the US or a country with a US free trade agreement.
US citizens, with the option to transfer tax credits directly to car dealers from January 1, may witness a potential boost in EV sales. However, the stringent regulations on battery components and minerals have significantly reduced the count of qualifying EV models from 43 to 19, affecting multiple manufacturers. Tesla, Volkswagen, and BMW are actively working to verify the eligibility of their respective models, while Nissan collaborates with suppliers to regain tax credit eligibility for the Nissan Leaf.
Ford faces the loss of tax credits for specific models, and General Motors experiences temporary ineligibility for most oVs. These challenges underscore the industry-wide impact of evolving regulations on affordability and adoption, leaving the Treasury Department open to further modifications as additional manufacturer details become available. The conversation surrounding the accessibility of electric vehicles in the US remains at the forefront of industry discussions.
